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Reminiscences of a Stock Operator
deceased; he is sure to find himself tied up with it when some really good things come
his way.
One day the foremost member of the Imperial Steel syndicate, acting for himself and
associates, came to see me. They wished to create a market for the stock, of which they
controlled the undistributed 70 per cent. They wanted me to dispose of their holdings at
better prices than they thought they would obtain if they tried to sell in the open market.
They wanted to know on what terms I would undertake the job.
I told him that I would let him know in a few days. Then I looked into the property. I
had experts go over the various departments of the company industrial, commercial and
financial. They made reports to me which were unbiased. I wasn't looking for the good
or the bad points, but for the facts, such as they were.
The reports showed that it was a valuable property. The prospects justified purchases of
the stock at the prevailing market price if the investor were willing to wait a little. Under
the circumstances an advance in the price would in reality be the commonest and most
legitimate of all market movements to wit, the process of discounting the future. There
was therefore no reason that I could see why I should not conscientiously and
confidently undertake the bull manipulation of Imperial Steel.
I let my man know my mind and he called at my office to talk the deal over in detail. I
told him what my terms were. For my services I asked no cash, but calls on one hundred
thousand shares of the Imperial Steel stock. The price of the calls ran up from 70 to 100.
That may seem like a big fee to some. But they should consider that the insiders were
certain they themselves could not sell one hundred thousand shares, or even fifty
thousand shares, at 70. There was no market for the stock. All the talk about wonderful
earnings and excellent prospects had not brought in buyers, not to any great extent. In
addition, I could not get my fee in cash without my clients first making some millions of
dollars. What I stood to make was not an exorbitant selling commission. It was a fair
contingent fee.
Knowing that the stock had real value and that general market conditions were bullish
and therefore favourable for an advance in all good stocks, I figured that I ought to do
pretty well. My clients were encouraged by the opinions I expressed, agreed to my terms
at once, and the deal began with pleasant feelings all around.
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