I have read the book The Little Book That Beats the Market by Joel Greenblatt who mentioned the magic formula in his book. In his book he mentioned the below strategy to sell stocks:
Sell each stock after holding it for one year. For taxable
accounts, sell winners after holding them a few days more
than one year and sell losers after holding them a few days
less than one year
But, as I was reading the strategy you have used in the Magic Formula Smallcase, it is written that rebalance will be done quarterly, which means that you could be selling the stock before 1 year, which is wrong as the stock may not give good results in such short duration.