The Great TFSA Race: 3rd place

3rd place: Philippe, $100,021

Looks for high-growth nano-caps

(Photograph by John Londono)

(Photograph by John Londono)

Philippe Bergeron-Bélanger // 27 // Montreal

TFSA: $100,021

Investment strategy: Looks for high-growth nano-caps

Philippe Bergeron-Bélanger has a big goal for his TFSA: he wants to reach $1 million by 2020. The accountant and master of finance student at the University of Sherbrooke came late to the game, opening his TFSA in June 2013 with an initial investment of just $12,000. On the recommendation of a friend, he bought a small mining exploration company called Nevado Resources Corp. (TSX Venture: VDO). “That was a mistake,” he says. “I bought first and did my research later. I soon realized the company had no expectations for revenue or profits any time soon. So I sold it a month later for about the same price. That’s one of my strongest traits—I don’t waste time praying for losing stocks to go up.”

Philippe then used all his TFSA contribution room to bring the account up to $26,000 and started investing in nano-caps—stocks with less than $50 million in market capitalization. “That is my playground,” he says. “I believe certain nano-caps are way undervalued given their growth prospects. Institutions can’t buy them because they are tiny and illiquid, but after the stock doubles or triples, it will pop up on the screens of institutional investors and money will flow in and drive the stock price even higher.”

Before buying anything, Philippe ensures a company’s growth is sustainable, that it has a good product or much-needed service, and solid management. “And I always talk to the CEO before buying the stock.” Nano-caps are often ignored by analysts, so investors have to rely on their own research. “I work hard to find opportunities that could reward me with a 500% to 1,000% return over the next three to five years,” he says. “Maybe you’ll find only two or three a year, but when you do find them, I believe you should concentrate your money in them.”

In July 2013 he put $6,000 into the pharmaceutical company BioSyent (TSX Venture: RX) at $1.53 a share and he sold them for $9.42 this past September—a 510% return in roughly 14 months. He also invested $6,000 in XPEL Technologies Corp. (TSX Venture: DAP.U), which makes automotive paint and other products. He bought shares at 46 cents in 2013 and last summer bought more at $1.73. XPEL is now selling for more than $3.

Philippe insists he’s not an active trader: when he finds a good opportunity, he takes a position and waits. And who can argue with the results? “I’m sure a lot of other people have higher balances than me, but I think I managed to build my TFSA fairly quickly and don’t intend to stop now.”

The Great TFSA Race 2015

1st place

Rick & Maureen’s TFSAs: $1M+

2nd place

Shafik’s TFSA: $262,000

3rd place

Philippe’s TFSA: $100,021

4th place

Nita’s TFSA: $88,062

5th place

Milan’s TFSA: $86,300

6th place

Jin’s TFSA: $70,474