Monday, March 27, 2000
Toss that stock certificate?
Gramps' papers may be a treasure, or nice wall covering
BY SANDRA BLOCK
USA Today
Picture this: You're poring over your grandfather's papers and come across a stock certificate for a company called Haloid. You've never heard of it, and you can't find it on any stock exchange, so you toss the stock certificate out with Gramps' National Geographics.
Big mistake.
Haloid, chartered in 1906, became Haloid Xerox in 1958.
In 1961, it changed its name to Xerox. After numerous stock splits, a single share of Haloid purchased in 1910 would now be worth 48,600 Xerox shares, which in turn would be worth more than $1 million. Try getting that kind of cash for those National Geographics.
These days, most investors let their brokers store their stock certificates electronically, making it easy for the brokers to update records when companies merge or a company spins off part of its operations.
But before electronic bookkeeping became widely available, investors commonly received stock certificates as proof of ownership in a company. And many investors moved, died or simply forgot to exchange the certificates when the company changed hands.
Sometimes, it's easy to figure what has become of old shares. If you've got a pile of certificates for MCI, you don't need to hire a detective to figure out that the company is now MCI WorldCom.
But suppose you find a folder filled with certificates for Columbia Pictures. You know Columbia still makes movies, but when you check the stock exchanges, you can't find a company by that name. What happened to that lady with the torch?
The answer: Coca-Cola acquired Columbia in 1982. Consequently, 100 Columbia Pictures shares purchased in 1963 are worth about 12,000 Coca-Cola shares today, or $660,000, according to Pierre Bonneau, chief executive of Stock Search International, which researches old stock certificates.
Now the bad news: If you find a stack of old stock certificates in the attic, don't start spending wildly in anticipation of a windfall. Many certificates are for companies that no longer exist, said Bob Kerstein who buys and sells old stock certificates through his company, Scripophily.com.
“Sometimes a company may have operated one or two years,” said Caleb Estheline, director of securities research at R.M. Smythe, which researches and appraises stock certificates. And there are other reasons old stock certificates might not yield great returns:
• They were replaced. Even if you track down the company, you might find that the owner of the certificates reported them lost or stolen. “A lot of people's relatives will go through papers and find something that they think is worth a fortune, when in reality, it was replaced and sold,” Mr. Estheline said.
• The company won't honor your certificates. Some incarnations of old companies simply don't want to deal with old stock certificates. You can pay a search firm, such as Stock Search International, to try to retrieve your money, but that will cost you: Stock Search International charges 30 percent of whatever it recovers. You could try suing the company, but court costs could end up exceeding the value of your shares.
• The company reported your investment as unclaimed property. If a company loses track of a shareholder, “it's perfectly legal to list the property as abandoned and turn it over to the state as unclaimed property,” Mr. Estheline said.
Typically, companies will turn the accounts over to the state listed as the shareholder's last known address. If you can track down the state, you can check its unclaimed property listings. The Internet site for the National Association of Unclaimed Property Administrators is www.unclaimed.org.
But even if your old certificates have no corporate value, they might appeal to collectors. And thanks to the bull market in stocks, the collectible business is booming. “We've seen a great increase,” Mr. Estheline said. “A lot of our clients are in the financial industry.”
Just last month, R.M. Smythe auctioned a rare Standard Oil stock certificate for a record $110,000. The certificate was one of the originals issued when Standard Oil was formed and was signed by John D. Rockefeller.
It's extremely unlikely you'll get anywhere near that kind of money for the certificates that turn up in your basement. Most aren't worth the paper they're written on. But here are some clues that a certificate might appeal to collectors:
• It bears a famous person's signature. Harry Houdini founded his own film company, which issued stock certificates with his signature. Today, those certificates sell for $3,000 to $4,000, Mr. Kerstein of Scripophily.com said. Charlie Chaplin and former President Har ding also signed stock certificates for defunct companies.
The celebrities don't have to be dead. The New York Gift Exchange, which buys and sells stock certificates, lists a Planet Hollywood certificate bearing Arnold Schwarzenegger's signature for $95. Planet Hollywood certificates signed by Demi Moore, Bruce Willis and Sylvester Stallone are apparently less desirable, listing for only $74 each.
• It features an intricate design. In the days before electronic bookkeeping, some companies went to great lengths to design their stock certificates. These might have collectible value if they are wonderful to look at, Mr. Estheline said.
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