The Great TFSA Race: Penny-stock investor

Jim grew his TFSA to $300,000 with a single penny stock.

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by

From the December/January 2014 issue of the magazine.

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Photograph by Chris Roberge

Photograph by Chris Roberge

Jim Nykyforuk, 38, Kelowna, B.C.

TFSA: $300,000

Portfolio: 100% Zenyatta Ventures Ltd.

When Jim Nykyforuk’s wife, Paola, a conservative investor, found a financial adviser for the family in 2009, Jim insisted on one thing: the TFSA would be his to invest on his own. Jim, who works for a government agency in Kelowna, B.C., has maxed out his RRSPs but knew he could use his TFSA to do great things. “I saw the TFSA as a way to swing for a home run,” he says. “I’m a vanilla type of person elsewhere in my investments with hardly any capital gains in any of my other accounts. But I have a good defined-benefit pension with my employer, so I knew I could take some risk with the TFSA. If it goes to zero, I’m fine with that.”

By sticking to small-cap stocks, Jim hit the jackpot: His TFSA sits at just under $300,000. How did he do it? With two Canadian stocks: Mart Resources (MMT) and Zenyatta Ventures (ZEN).

Every year Jim contributed the maximum to his TFSA. Until last fall the only stock he held was Mart, a Calgary-based energy company focused on developing oil and gas projects in Western Africa. “I bought it between $0.40 and $1 a share from 2009 to early 2012,” he recalls.

Then in the summer of 2012, the stock stalled and Jim slowly liquidated his position through the fall of that year. “It was a risky move for sure, but the company had no debt and it even paid a small dividend,” he says. When Jim was fully cashed out, he had $45,000 in his TFSA from that first investment alone.

On the hunt for another fast-rising stock, last fall he participated in chat sessions with online traders and discovered Zenyatta, a Canadian junior mining outfit. So he put his entire $45,000 into shares of the Thunder Bay, Ont.-based exploration company at an average of $0.60 apiece. “I figured that if the stock went to zero, I was only losing $20,000,” Jim says. “That’s a lot of money to lose, but not the end of the world to me.”

Zenyatta has mining rights in Hearst, Ont. The company was initially looking for iron ore but found a large graphite deposit. Preliminary drilling results show the graphite is hydrothermal, or volcanic, and that its crystals have almost no impurities, according to Zenyatta. This form of the mineral commands a high price for industrial applications. By the end of January, Jim says he was “all in.”

He now has 84,000 shares in Zenyatta worth a total of roughly $300,000. The stock is hugely volatile, and this July, Jim’s holdings were worth about $344,000 at their peak of almost $5 a share. Jim, who believes the company will eventually be bought out, hopes to hold some stock until then.

In the meantime, he’s been slowly liquidating his position to help pay for a new home he and Paola are building for their growing family. The couple have two kids under age three, and Jim knows that whatever money he takes out of his account now can be slowly replaced over the years—a big attraction of TFSAs. “I have been fortunate with back-to-back home runs,” he says. “Sure, some days I’d pretend I was Gordon Gekko, but I’m really not. I don’t want to push my luck with a third risky stock.”

The Great TFSA Race

Small-cap turned dividend investor: Dale McSween, 64, Cornwall, Ont. – $61,700

Bottom-feeder turned income investor: Jean, 80, Sarnia, Ont., and his financial planner Jeff Burchill – $72,212

Value investor: Nathan Moncrief, 26, Winnipeg – $60,500

Micro/value investor: Jin Won Choi, 31, London, Ont.  – $50,876

Conservative income investor: Paul Boughey, 49, Cambridge, Ont. – $48,300

Risk- averse DIY income investor: David Boult, 57, Stittsville, Ont. – $46,350

8 comments on “The Great TFSA Race: Penny-stock investor

  1. Pingback: Should I be take risks with my TFSA?

  2. Pingback: The six-figure TFSA | TFSAs.ca

  3. Hi,
    I earned great profits investing in penny stocks. My favorite ones are the OTC US stock listed companies. Has anyone tried out penny stocks of Gala Global Inc.? If yes, please share your trading experience with me.

    Reply

    • Ya because I always trust a new for money advice lol

      Reply

  4. How about an update there Jim. MMT has eliminated their dividend and is down to less than half what it was when this article was written. High gain = high risk.

    Reply

  5. I hope he sold it lol. Zenyatta is at 77 cents!

    Reply

  6. Congrats Jim, I wonder how you’re fairing with this TFSA portfolio now..

    I agree with leveraging your TFSA to invest in Penny Stocks and do it myself as well.

    For those that may be interested in Penny Stocks, I have both built and run them, invest in and help financing them as well. I have also just released my new book, call the Penny Stocks Bible; An Insider’s Proven Formula for Building and Picking Winners.

    The book is available for download here: http://www.mcmillanstrategies.com/penny-stocks-bible-ebook

    I hope my insights help you along your way..

    Best of luck to All!

    Chad

    Reply

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