Bloomberg Finance , LP
Chart of GameStop ( GME ) stock , January 2015 through June 2021 .
antecedent to exactly this — a massive corps of brokerage customers being led , or at least inspired , by a financial market commander of sorts — is found in Boston , in the early 20th century .
Thomas Lawson : The Original Roaring Kitty
Thomas Lawson was born in the Charlestown neighborhood of Boston in 1857 . He grew bored of school and , at the age of 12 , sought employment on State Street — then and now the Wall Street of Boston . Over time , he took to speculation in stocks , becoming wealthy and losing everything several times before focusing on copper stocks .
But it was being hired to manage and reverse the fortunes of the failing Rand , Avery & Company , a publishing firm where Lawson learned what would become a signature tool in his stock market operations some years after his career began . An indisputable proponent of using controversy to fuel sales and foot traffic , he began publishing books “ that other publishers were afraid to handle .” From there , he :
spent money lavishly advertising his wares in the Boston newspapers and made the conservative old publishers of the town sit up and gasp … He organized an advertising bureau , a novelty in those days , and announced that he would undertake to direct the advertising of large manufacturing concerns .
Before Lawson ’ s campaigns , there had certainly been stock touts , tipsters and other forms of information passage that sought to influence stock prices . And , of course , America has seen wave after wave of populist movements , the gross majority of which were egalitarian and anti-capital .
Most have harbored deep suspicions , if not outright hatred , of Wall Street . Lawson ’ s innovation — aside from a thennovel system of recording retail sales and perhaps the first fantasy sports game — was to mix the two . He would declare himself a reformer , having seen illicit and illegal conduct as an inside operator , and bring justice down on wealthy wrongdoers even as he and his legions profited heavily . And the catalyst for activating this wave ? The late 19th-century equivalent of the internet : newspaper advertisements .
Lawson ’ s Early Forays and Failures
In a handful of smaller battles , Lawson used newspapers and direct mailings to influence shareholders of practices he saw as ruinous or ill-advised . But it was in two particularly noteworthy episodes that his position as a formidable stock influencer was established — albeit with diametrically opposed outcomes .
In the first , he was hired by the industrialist Aretas Blood to market Grand Rivers , Kentucky , where the Cumberland and Tennessee Rivers meet , as the site of a future iron mine and charcoal iron foundry . Furthermore , the site would soon become one of the next great major cities of the United States .
Lawson let his advertising genius loose on the enterprise , and there poured forth a flood of prospectuses , circulars , booklets , posters , maps , newspaper articles , biographies , interviews — all done to the queen ’ s taste . Every bit of printing that went out of the company ’ s office — the printer , the type , the colored inks — was devised by Lawson .
The Grand Rivers effort was nevertheless a flop . Yet having made many trips there , and no doubt richly compensated for his efforts , Lawson described it as a pleasant but expensive experience . In his words , like “ a young man … who broke his arm being thrown from his horse [ but ] into the lap of his future wife .” Many investors , needless to say , saw grievous losses as the campaign ended with a whimper .
The second formative assignment involved the 1890s battles between Westinghouse Electric and General Electric . General Electric , backed by banking interests in both New York City and Boston , sought to acquire Westinghouse . George Westinghouse resisted commercial absorption but feared that continuous assaults upon his company both within and outside the equity markets would drive the stock price down , making it more difficult to arrange financing or issue additional stock .
He called in Lawson , whose campaign was kicked off by an anonymous column in the Boston Commercial Bulletin . Evoking the 1980s strategy to forestall corporate raiders known as the “ Pac-Man Defense ,” it posed a hypothetical :
Today , the question is not when will the General Electric gobble up the Westinghouse , but how long can the Trust stand the hammer blows that are being dealt to it fast and furiously by the Westinghouse Company ?
In a long , pitched battle , featuring backand-forth accusations of accounting chicanery , aggressive short selling and other misdeeds , General Electric eventually “ went away ,” with Westinghouse stock finally rising enough to successfully sell $ 4 million worth of stock . ( Westinghouse Electric still exists as a subsidiary of Viacom CBS ; Westinghouse Air Brake Technologies is publicly traded to this day .)
Roaring Kitty ’ s GameStop Thesis
GME traded at between $ 11 and $ 58 dollars per share from 2009 – 2019 . By the end of 2019 it was in single digits , having traded down to $ 2 or $ 3 per share as the outlook for the firm , which operates nearly 5,000 store locations around the world , dimmed rapidly . Keith Gill ’ s — Roaring Kitty ’ s — GME activism began in 2019 , when the stock was trading at just over $ 5 . In the spirit of the great value investors — Buffett , Graham , Lynch and others — he laid out a case that the long-term value of the company was vastly beyond what the current stock price
www . MoAF . org | Summer 2021 | FINANCIAL HISTORY 19