Wall Street Steward Blog

Beauty Is In The Eye Of The Stockholder

Imagine yourself packing up your parent’s belongings to assist them in moving to an assisted living facility…and you stumble across a box of old stock certificates.

WHAT goes through your mind?



—-Option A—-These are worthless, why don’t they just throw all of this old stuff away?

—-Option B—-  These things could be worth a fortune.  Did I just find a pot of proverbial gold?

You probably will not recognize the company listed on the certificate, nevermind trying to figure out an initial investment amount or when they might have been purchased.

Also, if there are multiple certificates, are the shareholders the same?  Are they listed the same way or do the certificates look like this:

Certificate #1:  Christopher Twedt
Certificate #2:  Christopher M. Twedt
Certificate #3:  C. Matthew Twedt
Certificate #4:  Chris Twedt
Certificate #5:  C. M. Twedt III
Certificate #6:  Chris M. Twedt III

You tired yet? 

Those certificates are all owned by the same person, but because the name is listed 6 different ways, it adds to the confusion of turning the stock certificates into money.

if the shares are listed in all of the various names listed above, then the firm will require something called a “one and the same letter.”  This letter would state that Christopher Twedt is also Christopher M. Twedt and C. M. Twedt … yada, yada, yada…

The first step in sorting out this mess is to determine the origin of the company that issued the stock.  One would be amazed at how useful Google is for this.  Just input the name of the old company into the search engine, and usually that will lead to a rabbit trail (company A was purchased by company B, and then spun off as part of a stock deal, etc.) that will provide the name of the current company. 

Once the name of the company is discovered, assuming that it is still in business, the next step is to contact the investor relations department of the company.  Most companies either maintain their own record of shareholders (listed by social security number), or they hire use a 3rd party company (called a transfer agent) to do this.  Either the company, or their transfer agent, will be able to reference the shares by using the certificate number and/or the social security number of the stockholder.  They will also have access to any potential stock split information or company reorganization terms. 

In your quest to help out the shareholder(s), these people are your friends.

So you have found the current company’s name and determined how many shares are held…the next step is to check the current stock price.  Visit any website that provides stock quotes (like this one) and type the name of the company in the search bar.  That will provide the current share price. 

After some grade school *m*u*l*t*i*p*l*i*c*a*t*i*o*n*, you should have an approximate market value of the old, dusty shares.  The stockholder can choose to either hold the shares, in which case I would get new shares issued with a consistent naming structure (pick one please), or to sell the shares and turn the stock into spendable $cash$. 

Please keep in mind that sometimes the above listed steps can take a significant amount of time, and that most investment firms have experts in place to investigate these types of things for you.  I would trust the research department at an investment firm if it were me…just (1)open up an account, (2)deposit the shares, and (3)they will do the research for you.

Once they inform you of their findings, you will have the option of holding the shares or selling them.  There will be fees associated with selling the shares, and there very well could be tax implications as well.  In order to know if a potential sale would realize a capital gain or loss, the original COST BASIS must be found.

so, ask your 89 year old grouchy father what dollar amount he put into the stock in 1947***
he doesn’t remember what he had for breakfast, so that might not work

“Where are my teeth son??!” was his response.  Hmmm…

There is an art to finding a long, lost cost basis, but I can’t give away all of my future blog entries, right?  I gotta hold something back to keep you coming back for more!

As you can see from reading this blog, there is an extensive process that must be completed in order to assist someone with an old stock certificate.  That being said, I would leave it up to your advisor, the research of their firm, and the transfer agent of the stock to help with this. 

Then, you can go back to your elderly parents and take all of the credit for finding some free money for them.

Creative Commons License photo credit: Jack Polaritz Collection