A penny for your shares
MARC HASENFUSS: The pennystocks that could make you rich
For investors who can afford looking into high-risk options, pennystocks can (sometimes) bring high rewards
There’s one quasi-asset class for which investors on the JSE always appear to be spoilt for choice — the pennystock sector. At the time of writing there was a surfeit of stocks, spread across most counters, that are trading below 50c (which, for the purpose of this article, is the Financial Mail’s defined price limit for pennystocks). Pennystocks, with their high-risk/high-reward attributes, have always fascinated mainly the retail investment community. The eternal hitch is that the high rewards tend – in share community chatter – to be emphasised over the sometimes diabolically high risks. A share reaches pennystock levels for good reasons. An operational or acquisitive strategy may have gone awry, the balance sheet may be dangerously strained, management may have proved inept under pressure, the main shareholders may be in conflict or the company’s niche may be overtraded or no longer relevant. Common sense might dictate that it’s far more prudent for investors to concentrate thei...