He wrote the following about the corners in the 19 th century:Ī wise old broker told me that all the big operators of the 60s and 70s had one ambition, and that was to work a corner. The Vanderbilt story was described by Edwin Lefevre (alias of the legendary speculator, Jesse Livermore) in Reminiscences of a Stock Operator.
The biggest loser in the corner was Daniel Drew. One of those board members was a long-time Vanderbilt rival and legendary speculator, Daniel Drew.Īt last, when Vanderbilt owned more shares than there were outstanding, he offered to let the council members cover their short positions with only small losses if they recalled the license.
#VW SQUEEZE LICENSE#
The raiders tried to profit by shorting a railroad company that Vanderbilt controlled and then revoking the company’s principal asset: a license to operate a street railway. They included members of the New York City council as well as directors of the board at the company itself.
“I don’t care half so much about making money as I do about making my point, and coming out ahead” Cornelius VanderbiltĪt the time, the raiders selling short the stock of Harlem Railroad were not your ordinary investors. The move not only made him a small fortune but also gained him control of the only two rail lines offering service to Manhattan.
Other than the Piggly Wiggly story, history has managed to throw up other incidents of these dramatic market corners – some equally unsuccessful and others rather fruitful for the initiators.Ĭornelius Vanderbilt famously managed to pull off a corner in 1862 of the Harlem Railroad by anticipating its strategic value in the midst of a bear raid. The story of Clarence Saunders and Piggly Wiggly is brilliantly described at length in John Brooks’s 1969 book, Business Adventures (chapter: The Last Great Corner). Saunders failed to grasp the second-order effects of acting on his principle. The corner was successful, but the man who executed it eventually went broke. Saunders’s position was not tenable due to his debts, and he eventually suffered so large losses that he was forced to declare bankruptcy. This gave enough time for the short-sellers to access shares of Piggly Wiggly not in circulation and thus forcing Saunders to offer his shares at a steep discount. So by borrowing ten million dollars from banks, Saunders managed to accumulate 98% of the shares traded and drive the stock price up from $39 to $124 in a short period a catastrophe for the bear raiders who faced enormous losses when the price ascended.īut just as Saunders’s plan seemed to work to the tee, the bear raiders managed to convince the stock exchange to intervene and suspend trading in Piggly Wiggly and later grant an extension for paying up. Once Saunders would own enough of the shares outstanding, he would be the ultimate lender and subsequently issue a notice demanding the shares redeemed at a high asking price. The stock price dropped so fast that it began a chain of concerns among the company’s existing investors and creditors.Įager to teach these short-sellers a lesson, Saunders decided that he wanted to corner the market by acquiring all the shares that were being traded and lent to short-sellers. As a result, some investors tried to take advantage of this by starting a bear raid against the company on the New York Stock Exchange by aggressively shorting the stock. But as 1922 passed, some of the stores operated by franchises in New York ran into financial trouble and closed their operations. It was related to the company’s stock.Īfter opening his first Piggly Wiggly store, Saunders was fast to expand the business into many states through direct ownerships and franchises with continuous success. But the reason why it didn’t end up that way wasn’t directly related to its business. We also explore a listener question Tesla's dominance in Electric Vehicles!Īs an episode note, there are lots of fantastic stories written about the VW / Porsche short squeeze.The truth is that Saunders and Piggly Wiggly did have great chances of accomplishing what Sam Walton later did with Walmart. We'll examine the infamous Volkswagen / Porsche Short Squeeze, how a tiny little automaker from Stuttgart almost secretly took over one of the largest automakers on the planet, and how Porsche quickly became the hunted after hunting for a long time. As we all hear about the recent stock market frenzy about a video game retailer and redditors attempting to take down hedge funds and short sellers through something called a 'short squeeze', this week we explore an automotive short squeeze that many have been comparing GameStop to this past week.
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