The founder of Morning Sun Books is a securities trader.  He once made a small fortune in railroading.  Not by starting with a large fortune, either.
Caution thrown to the winds, I instructed the trading desk at our small firm to place an “OW” (Offer Wanted) for Lehigh Valley common in the pinks, gave them a big $1 price for the first 100 shares, and sat back, biding my time.

Sure enough, toward the end of 1972, I was at my full-time job as a towerman holding down first shift at Roseville Avenue on EL’s Morris & Essex Division when the outside phone rang. It was Harold, the trader at our firm: “Bob, you just got hit with 100 Lehigh Valley at $1. What do you want to do?”

“Drop the bid down to 50 cents,” was my quick response. Fifteen minutes later, the phone rang again. It was Harold again: “Bob, you got another 500 at 50 cents. What do you want to do?”

“Drop it down to 25 cents.” And we were off to the races. In the next two weeks of tax selling, I accumulated a total of 2,100 shares in dribs and drabs before I finally told Harold he had better stop as I began to worry that even at this price, it might be throwing money down the proverbial drain. Having lost some faith in the far-fetched scheme, I even instructed Harold to have the actual certificates sent to me on the theory that at least they would be railroad collectibles.
Most of the Lehigh Valley stock belonged to Penn Central by virtue of The Pennsylvania Railroad.  And his bottom-feeding was with the few minor investors, who could report a tax loss on the sale of stock, something that's not possible (I learned this once, the hard way) when the stock loses all its value.  But in the creation of Conrail, Lehigh Valley had something that Penn Central wanted.
Lehigh Valley had one asset Penn Central wanted very badly, and to gain this, PC needed ownership of my stock. It was the Valley’s huge losses from the 1950s right up to April 1, 1976. These tax-loss carry-forwards could be applied against Penn Central’s current profits from its new non-rail units so as to avoid paying taxes in the 1980s.

For me, the money was a windfall and helped me found Morning Sun Books, two of whose first products were books on Penn Central and the “blue-chip” Lehigh Valley.
I don't recommend holding penny stocks in companies that have tax-loss carry-forwards, but perhaps there were other small investors in Lehigh Valley who held theirs, rather than dump small lots at a quarter a share, with the Conrail rescue in mind.

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