From legendary short seller to god of American capital

Chapter 92 Discovering Good Stocks Around Us

Larry had a quick lunch in Hartford, and around 1 p.m. he hailed a horse-drawn carriage to go to Colt Firearms Company, thirteen miles away.

The carriage we were riding in was pulled by two older white horses. Perhaps they were old and wise, or perhaps as pack animals they had experienced too many moments of passion and disappointment, so much so that their work had become mundane.

As Larry traveled along the country road, the two horses simply strode forward at a slow pace, making the carriage very stable.

The coachman was a very talkative fellow. He drove the carriage, glanced at the warm sun high in the sky, slowly loosened the scarf around his neck, and asked for the third time,

"Sir, are you an employee of Colt Company, or do you have urgent business to attend to? For just 50 cents more, I can make the carriage run twice as fast."

Larry smiled faintly, "No need, let's just take our time. I'm not in a hurry, and I'd also like to enjoy the scenery along the way."

The coachman frowned, looking at the desolate winter countryside, and couldn't think of anything interesting to see here.

However, since the employer was not in a hurry, the coachman handed the reins to his left hand, took out a nearly crushed cigarette box from his pocket with his right hand, brought it to his lips, found the last cigarette inside, and casually threw the crushed cigarette box on the road.

"Sizzle"

The coachman struck a match on his seat, turned his head to the side, and lit a cigarette.

Larry happened to see this scene from inside the carriage. On a whim, he asked, "Driver, how do the cigarettes taste? I often see people selling these on the street, but I've never tried them."

The coachman took a deep breath, glanced back at Larry, and said with regret,

"What a pity, if you had said 15 seconds earlier, I would have given you this cigarette... This cigarette, well, the taste is actually much worse than a pipe, but it's convenient and cheap. Look, this pack of 12 is only 20 cents. If you smoke two packs a day, it's half the price of the same pipe."

Larry became increasingly interested; these days, the most ordinary coffee cost only 2 cents a cup, while a cigarette cost 1.66 cents.

It's impossible for someone to drink 20 cups of coffee a day, but smoking 24 cigarettes is quite common.

This is the secret to how tobacco companies' stock price has weathered over a century of boom and bust cycles, outperforming countless contemporary tech stocks and stable dividend-paying stocks, and becoming the stock with the highest overall gains.

Larry sat up straight and continued, "Are these cigarettes hand-rolled or machine-rolled? What brand are they? Which company makes them?"

The driver shrugged. "I just threw away the cigarette pack. Who knows which company it is? I only know it's called Bull Durham. It's an old brand, but it was recently integrated by a trust."

Larry clicked his tongue and said regretfully, "What a pity. I'm still very curious about the taste of this cigarette. If you could spare me a few, I'd be willing to trade you a cigar."

As he spoke, Larry pulled a cigar from his pocket and held it in his hand.

The driver glanced back at Larry, then reached into his pocket and rummaged around, muttering, "It's such a shame, I usually carry a few packs with me. Let me see if I have any left... Oh God, I actually had a pack in my right pocket! How come I didn't notice it before?!"

As he spoke, the driver, clutching a flat pack of cigarettes, turned and handed it to Larry with a genuine smile.

"Sir, it seems today is your lucky day. You'll get to taste this cigarette with its truly unique flavor!"

"Yes, today is truly my lucky day!" Larry smiled, placed the cigar in the driver's outstretched palm, then leaned back in the carriage and carefully examined the box of 12 cigarettes.

This cigarette brand, called "Bull Durham," had very simple packaging. The outer packaging consisted of a kraft paper bag soaked in a little grease, and the box did not have the colorful printed patterns commonly seen in later cigarette boxes. Instead, it only had the two simple words "Bull" and "Durham" printed on it, with the name of the manufacturing company—American Tobacco Company—at the bottom.

Larry tilted his head and thought for a moment; he did have some recollection of the stock price of American Tobacco Company.

This is not an active stock, as it is a small trust that is initially consolidating other tobacco manufacturers. The company is currently in the expansion phase, with a large amount of money spent on mergers and acquisitions. The funds raised from the IPO have also been used to develop new marketing channels, so there is no money to pay dividends.

At that time, in the US stock market, no logic such as high-tech concepts or speculation on new and small-cap stocks worked; investors only cared about dividends.

Firstly, it is only natural that listed companies should distribute dividends to shareholders after making profits;

Secondly, these days any company can go public, and many of them are complete scams. These companies are packaged by various capital groups and hastily pushed onto the stock market, raising a sum of money before disappearing without a trace.

American investors have been burned too many times, so they tend to favor companies that can consistently pay dividends. Because if a stock pays dividends on time, it at least indicates that the company isn't a complete scam.

In Larry's memory, British American Tobacco's stock price had been fluctuating around $2 for years, making it one of the many "zombie stocks" on Wall Street.

Larry tore open the cigarette company's packaging, casually pulled out five cigarettes, and spread them out on his palm.

These five cigarettes are all of the same size. Although the tobacco is still a bit fluffy, it is obvious that they are not hand-rolled, but machine-rolled.

Larry lit a cigarette, carefully tasted it, and immediately found that the tobacco flavor was far too pungent. Although the smoke was rich, it was extremely irritating, and the tar content must be very high.

Having grown accustomed to smoking high-end cigars since his rebirth, Larry found this pungent cigarette a real ordeal. The key issue was that pipes and cigars were meant to be inhaled rather than inhaled, but cigarette smoke was easily and passively inhaled into the lungs, the nicotine irritating the lobes of his lungs causing them to tremble slightly.

At that time, cigarettes were still the favorite of the lower class or workers who were rushing to finish their work. They could take a puff to relieve fatigue during their busy and heavy physical work, and it didn't cost too much money.

The main selling points of cigarettes are their affordability and convenience.

However, cigarettes currently account for a very small percentage of the overall tobacco market.

Larry finished his cigarette at a leisurely pace, taking about two minutes.

He then disgustedly threw the pack of cigarettes onto the seat opposite him, never wanting to touch it again.

But this company's stock...

Larry has automatically added it to the top of his watchlist; it's a very good investment, but he needs to wait for the right time to invest. Either the cigarette marketing period ends and sales begin to pick up;

Alternatively, one would have to wait for a nationwide depression, after which smokers' consumption levels would naturally decrease, and they would switch to smoking these cheaper and quicker cigarettes.

That's when the stock price skyrocketed.

Larry was lost in thought when he heard the coachman hurriedly rein in the two white horses, stand up, and gaze ahead at the road, muttering to himself.

"Oh my God, what the hell is that weird thing up ahead?"