From legendary short seller to god of American capital

Chapter 174 2 shares of New England Railroad stock

Chapter 174 2 shares of New England Railroad stock

Larry was surprised that Goldman Sachs had found out about the land so quickly, and a brief look of astonishment crossed his face.

Mr. Porter, however, did not seem so pleased. He frowned and said, "Goldman Sachs people... to be honest, I don't like them. They're too cunning. My clients, including myself, have suffered a lot at their hands."

Larry smiled slightly, knowing in his heart that neither Americans nor Europeans had a good impression of these ethnic minorities from Eastern Europe at this moment.

Larry still remembers Mr. Coster and how they looked when they met the two Goldman Sachs representatives; they were like rats in their sight, holding their noses as they did business with them.

But it didn't matter to Larry, as long as he could make money.

Mr. Potter's displeasure was merely a frown, but then he remembered something more important. He pointed to Larry's suitcase and asked, "Are there really 20,000 shares?"

Larry was still preoccupied with real estate, and when he heard Mr. Potter's question, he paused for two seconds before confirming.

"Yes, shares of the New York, New Haven and Hartford Railroad Corporation. A client I know was in a hurry for money and transferred these shares to me."

Mr. Potter's face turned serious. He beckoned to Larry, "Come, let me see!"

Larry opened the small leather suitcase, took out 2 shares of New England Railroad stock, and placed them on Mr. Potter's desk.

Mr. Porter took out his glasses from his pocket and began to check the physical stock certificates one by one, his eyes focused and serious.

Larry had known Mr. Porter for a long time and knew his habits. He was always meticulous in his work, even with his own family or good friends like Larry. Whenever it came to work, Mr. Porter was always very serious and meticulous.

After checking, Mr. Potter took off his glasses, nodded to Larry,

"The stocks are fine, are you really going to sell them, Larry?"

Larry sensed the veiled meaning in Mr. Porter's words and quickly sat down to ask, "What do you think? I don't necessarily have to sell it right away."

Mr. Potter pondered for a moment, as if he had a plan, but he didn't rush to reveal it. Instead, he picked up the phone and dialed an internal number.

Soon the call connected, and Mr. Potter asked, "Hey, Heim, could you check when the New York, New Haven, and Hartford Railroad Union went public?"

"This Friday, sir!" the voice on the other end replied.

Mr. Porter pondered for a moment, then asked, "Do you know what Wall Street's target price is for this stock?"

There was a moment of silence on the other end, as if searching for information. After a few seconds, he said, "It should be above $20. This is a railroad merger project led by Mr. Morgan. Wall Street has a high opinion of the stock, and the market is also very enthusiastic about the stock price of such merged railroad companies."

Mr. Porter thanked the other party, hung up the phone, and pondered for a moment before saying, "Larry, I have a suggestion. Why don't you mortgage these stocks to a bank and get a loan? You know, recently the short-term lending rates on Wall Street have been getting higher and higher, but mortgage rates haven't skyrocketed yet. I think your stocks will definitely increase in value after they go public, and then you can mortgage them again. Whether you use the money for short-term lending or buy and sell bonds, you can get a greater return, and you'll also lock up some funds in your hands."

As he spoke, Mr. Porter looked intently at Larry and said solemnly, "Remember, when Wall Street is short of money, you must try to hold onto cash as much as possible. If you're not in a hurry to sell these stocks, you can mortgage them."

A vague idea suddenly popped into Larry's mind, but it seemed to be hiding from him. As soon as he became aware of it, the idea that had suddenly appeared in his mind vanished with a whoosh...

Larry pondered for a moment, then nodded in agreement with Mr. Potter's idea.

"I'm not in a hurry to sell these stocks. What you said makes sense, so why not mortgage them? If we followed your suggestion, the money from the mortgage could be used for many things... But, Mr. Porter, I don't know how to do that, and I don't want to lend this money to strangers."

"Then buy some bonds, even more Edison Electric Light Company bonds... When the IPOs start again, you can buy more. Let me see, I think you can probably get those 2 shares pledged..."

As Mr. Porter spoke, he casually pulled out a pen and began calculating the stock collateral value based on Wall Street valuations on the letter paper. After a while, Mr. Porter suddenly froze...

Because the calculation on his letter, multiplying 2 shares by $20, resulted in $40...

Even with a 70% loan-to-value ratio, Larry could only borrow $28...

$28!!

The money Larry quietly obtained by using 20,000 shares as collateral at a discount was more than the money Wallace received for completing the unprecedented $28 million Colt financing project, including the sum of insider trading and company rewards.

Previously, Mr. Porter's mind had been preoccupied with business matters, without giving a single thought to the value of those 2 shares. Now that he had calculated the figure, he felt his head suddenly spin...

Mr. Potter abruptly looked up, staring intently at Larry, his speech quickening slightly without him even realizing it.

"Larry Livingston...did you buy all these stocks with the money you made?"

Larry also felt that Mr. Porter's reaction was a bit excessive, and quickly explained, "When I was helping Mr. Wallace buy in, I thought Colts was performing very well, so I bought as many as I could myself..."

Larry is right. In fact, his biggest profit to date came from going long on Colt.

Mr. Potter thought for a moment, then nodded silently and said, "...Well, my God. Are you really that crazy right now? You know, Larry, even I can't keep up with you."

Larry, not wanting Mr. Porter to be troubled by his wealth, quickly explained, "Sir, I haven't changed. I'm still the same person. It's just that things have been going well for the past few months."

"Alright!" Mr. Porter reluctantly accepted the answer, but still dutifully told Larry, "...I suggest National City Bank of New York for pledging. Their clients sometimes use existing stock holdings to short sell, so the bank offers higher interest rates on popular stocks than other banks. Plus, National City Bank of New York is big enough and safe enough!"

"Yes, Mr. Potter! We'll do as you say!" Larry nodded.

Mr. Porter seemed a little distracted, but continued, "Alright, I'll call their manager at nine o'clock. I reckon I can get the rate down to 78.5%, um, at least!"

Larry continued nodding.

Mr. Potter picked up the phone, seemingly about to make a call, but after a few seconds, he suddenly looked up at Larry and blurted out,

"Larry! You've been doing really well lately... Why don't you tell me how to make more money too...?"

Larry smiled and quickly replied, "I'd love to, Mr. Potter!"

In fact, Larry has always been grateful to Mr. Porter, having received his guidance on numerous occasions. If there's one reason why his investment career has been so smooth, it's because he benefited from Mr. Porter's help at many crucial moments.

Especially the book "The Great Madness". When Larry bought another copy of "The Great Madness" from the old shopkeeper at the bookstore, he realized that Mr. Potter had already given him the bible of salvation. He just didn't realize at the time that such a good book, the book that solved his confusion, was actually right beside him.

Larry is now making money, and even out of a simple sense of gratitude, he wants to help Mr. Potter make some money.

Mr. Porter had always tried to maintain his public image and was unwilling to openly discuss asking Larry to help him make money. Last time, when Larry and Mr. Wallace discussed buying General Electric stock, Mr. Porter also said he would only act as a broker, not do the trading.

But this time, it was Larry's 2 shares of New England Railroad stock that truly touched Mr. Porter. His momentary lapse in concentration, his momentary absent-mindedness, and his momentary blurting out, "Tell me how to make more money!"

This is already a genuine expression of Mr. Potter's feelings!

Larry then spoke to Mr. Porter, saying what had been on his mind: "Sir, you have helped me the most along the way. If I have the opportunity to repay you, I would be more than happy to do so and it would be an honor."

Mr. Potter had just realized that he had spoken his true feelings to Larry a few seconds earlier, and now his face was a little red, but he said in a deep voice,

"Yes... After coming to New York, I found that although I got a promotion, my living expenses and other costs also increased. In addition, my two children are in college, and they all need my financial support. I really am..."

Larry nodded hurriedly, "Mr. Potter, you don't need to explain. I'll say it again: if I can help you, I'd be more than happy to!"

Mr. Porter looked at Larry, nodded heavily, and sighed softly, "Good, good! With your guidance, I believe I should be able to make some money until I retire."

As he spoke, Mr. Potter looked up and met Larry's gaze, his eyes filled with emotion and satisfaction, and the wrinkles on his face slowly smoothed out.

Larry smiled too, a genuine smile as if it were his first day at the Boston branch, and said to Mr. Porter with a smile,

"Sir, I have a great way to generate cash flow and make money long-term. Remember those renters in the Back Bay who live off rent, as you mentioned before?"

Mr. Porter nodded, then suddenly realized something and raised his voice, "You mean... the property Goldman Sachs was talking about?"

Larry nodded and said, "Yes, if it really is commercial property as they say, then buying it now, collecting rent, and waiting for the asset value to appreciate is just replicating the methods used by those people in the Bay Area, isn't it?"

"Are you sure the property prices there will go up? Property taxes in New York aren't low!" Mr. Porter asked, frowning.

"I'm sure the land there will appreciate in value once the Waldorf Astoria opens!" Larry said with a smile.

Mr. Potter gritted his teeth and said, "Fine! I believe you, Larry!"

(End of this chapter)