Introducing the Super Monkey Portfolio
Andrew is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
When I was in college, the investment club that I belonged to would measure our success not only on our return vs. the market, but we would also compare ourselves to a “monkey portfolio.” It was a simple concept that if you gave a monkey a dart and a wall covered with stock tickers, the monkey would select his stock based on the tickers that he hit. Simply put, it was a random selection of stock tickers.
As a general rule, our managed portfolio would perform better than the monkey portfolio, however every so often the monkey would pick a stock that would outperform at least one of our own. Lately I have been revisiting the thought of a random portfolio, but tweaking it and making it an educated random selection -- I’ll call it the Super Monkey Portfolio. Think of it as Planet of the Apes monkeys who are focused on picking stocks instead of ruling the world.
I found an app on the iPhone that is a random stock ticker generator. With a push of a button this app would generate several letters that it would then input into Yahoo Finance. It would take more than one random generation because the app is more of a random letter generator than ticker generator, but eventually it found a ticker match. Since this was a random ticker, the company might not be a sound investment. In order to make this the “Super Monkey Portfolio” I would have to keep generating stock tickers until a good investment came up. It wasn’t easy, several popular tickers appeared such as Ford as well as Citigroup. Finally after about 5 minutes of searching, the perfect stock for the Super Monkey Portfolio appeared: Newpark Resources Inc. (NYSE: NR).
About the Company
Newpark Resources provides fluids management and well site preparation for the oil and gas exploratory industry. Founded in 1932 in The Woodlands, Texas, they primarily operate in the United States with operations in Mexico, Europe, Canada, Brazil, North Africa and the United Kingdom.
Reasons for Consideration
In case you haven’t heard, the oil and gas business in the United States is booming. Recent advancement in oil and gas recovery techniques has allowed previously unreachable oil deposits to become accessible. North Dakota now has an oil field called the Bakken field, which is roughly the size of West Virginia and contains up to 3 billion barrels of oil. The demand for exploratory oil wells is great and is only increasing. Newpark Resources certainly shows this demand.
Over the past 52 weeks, the S&P 500 moved -2.28%. Over that same period Newpark changed 38.23%. As an avid buy and hold investor, seeing such healthy positive returns while the S&P 500 is negative is very appealing. Here are some other key components* of NR that were important to my Super Monkey Portfolio selection.
Price to Book: 1.59
Quarterly Revenue Growth (yoy): 45.70%
Current Ratio: 3.42
Debt to Equity: 36.70
Overall, I believe that Newpark Resources is a stable company with great financial results that lives in an industry that is experiencing extraordinary growth. That is why I am happy to include Newpark Resources as my inaugural company to the Super Monkey Portfolio.
Every few days I will be including a new stock as well as announcing the performance of the Super Monkey Portfolio.
Andrew Dillard does not own any of the above mentioned stocks.
*data provided by Yahoo Finance