Before this time, people had to go into a store, give the clerk a shopping list, and then wait for their items to be gathered and brought out.
You think the Gamestop short squeeze is the greatest ever? Not. Even. Close.
This is the story of Piggly Wiggly and one man taking on Wall Street ALONE.
Buckle up, because this is one of the craziest stories in investment history.
Before this time, people had to go into a store, give the clerk a shopping list, and then wait for their items to be gathered and brought out.
People loved the idea so much that within 3 years there were over 1,200 Piggly Wiggly stores in the U.S.
Unfortunately, some of these retailers in the northeast began going out of business in the fall of 1922, all while using the Piggly Wiggly name.
They began shorting Piggly Wiggly while also spreading rumors that the parent corporation was in trouble.
Within a week the price dropped from $50 to $40 a share.
As a result, Sanders publicly announced that he would “beat the Wall Street professionals at their own game.”
Immediately Sanders took out a $10 million loan sourced from various banks, stuffed his suitcase and pockets full of cash, and boarded a train to New York City.
Sanders was determined that he could corner the market.
Saunders wanted a corner so he could force the short sellers to pay him whatever price he wanted.
This is how a short squeeze works.
This was Saunders' end goal.
On the first day he (and his secret group of traders) bought 30,000 shares. Within a week Saunders owned 105,000 shares, or more than half of those available for trading.
However, Saunders knew that even if he won his corner, he would need an escape plan.
If you try to sell all your shares at once, the price crashes and you are ruined.
Yes, he was selling, but at a price of $55 a share, or about $15 below the current market price.
But there was a catch…
More importantly, you couldn't own the shares (and re-sell them) until the final payment was made.
In doing the sale, he got both.
With Livermore gone, Saunders was truly alone against Wall Street
So on March 20, 1923, Clarence Saunders sprang his trap on the shorts—that morning he called for delivery of his Piggly Wiggly stock.
By noon the price was $124.
The shorts were cornered and only had until the next day (Wednesday) to deliver their shares. But then, the rules changed.
Saunders countered and offered a deal of $150 a share for delivery by end of day Thursday and $250 a share thereafter.
Then, the Governing Committee delivered the death blow to Saunders. They restricted trading of Piggly Wiggly and gave the short sellers until the next Monday to deliver the shares.
Instead of getting paid in dollars, Saunders got the last thing he wanted—more Piggly Wiggly shares.
He had lost. Wall Street had won.
Either way, Saunders’ corner didn’t ultimately failed.
Unfortunately, this adulation didn’t translate into financial assistance. Saunders eventually declared bankruptcy.
If you liked this story, you can read the full version in “Business Adventures” by John Brooks:
https://t.co/ahbcfwVrCR
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