DECEMBER 19, 2000
SPECIAL REPORT--AFTER THE MELTDOWN
Are Defunct Dot-Com Shares Worthless? Not Always | Collectors of stock certificates are snapping up the paper, hoping it will become more valuable than the shares ever were
| If your once stellar dot-com has gone belly-up, there still may be hope for an impressive return. Just hang onto the stock certificate. Today's dot-com companies are generating the same investment fever that oil and mining companies did 100 years ago -- and paper from those companies can be worth a pretty penny now.
Just ask Frank Hammelbacher, a 20-year veteran of the increasingly popular pastime called scripophily -- the formal name for collecting antiquated stock certificates. His prize collection of 400 includes one of the three original Buffalo Bill Wild West certificates signed by William F. Cody in 1887. Experts say it could sell for close to $1 million.
Equally impressive is the Virginia City Gold Mining certificate on which Samuel Clemens scribbled his name in 1863. It's worth about $100,000, which makes Hammelbacher's Standard Oil original stock certificate's worth of $6,000 look like chump change. "Collectors go after pieces with historical significance," he says. "Someday, people will pay big bucks to have a collection of '90s technology stock certificates."
GREEN DINOSAURS. No doubt, the frontier rush of dot-coms will leave some treasure amid the rubble of their demise. Take Pets.com. It may no longer be listed on Nasdaq, but keep the certificate, especially if it -- as some do -- features the company's telltale sock puppet. The colorful designs on Garden.com certificates could make them hot, too.
If stock certificates continue to become the dinosaurs of paper issuance, prospects will turn even greener. Almost all Wall Street transactions are electronic now, and there has been a push to do away with paper certificates to cut costs. "Technology will be the last business boom to issue paper stock. That makes today's certificates extremely valuable," says Pierre Bonneau, CEO of Stock Search Intl. Last year, only 20% of stockholders bothered to request paper shares.
Don't ask for opening bids just yet, though. "The older the vintage, the better," says Warren Anderson, owner of American West Archives in Arkansas. Collectors willing to pay top price want their paper to be at least 75 years old. There are exceptions, of course. Some early certificates of thriving concerns such as Disney, Planet Hollywood, and Playboy from the '50s, '60s, '70s, and '80s already sell for more than $500 each. Their claims to fame: colorful animation, celebrity signatures, and a half-naked model, respectively.
Part of the nostalgia surrounding old stock, especially for noncollectors, is artistry. In the days before electronic bookkeeping, most companies went to great lengths to decorate certificates, and interior designers now pay hundreds for the fancy parchments that also serve as impressive wall decorations and conversation pieces.
LOST ART. Alas, don't count on seeing many modern stock certificates in any art galleries at the end of this century. Most of Corporate America bid farewell to intricate designs two decades ago and have since turned to plain colored paper. "It's a real shame, with everything moving so fast, that the sense of art has been lost," says Steve Ringer, who advises dot-com companies on how to give their certificates a pre-1900, wood-cut, engraved look. It's a novel idea, but few companies are willing to spend on designer paper anymore.
The bull market of the late '90s and the boost in disposable income breathed new life into scripophily, which was suffering from lack of interest. From just a few hundred collectors, their ranks now top 20,000, thanks in large part to the Internet. People from around theworld trade certificates on eBay and other online auction sites. But longtime collectors warn that you need to be discerning. "Most of it is wallpaper. Few are great rarities," says Hammelbacher.
At the very least, slices of financial history make good stocking-stuffers -- especially for investment gurus. Bob Kerstein, a Falls Church (Va.) dealer of antiquated stock, has seen his store's sales double since Nov 1. What are the hot sellers this holiday season? Ironically, fraudulent certificates, like those issued by Equity Funding and Great Goose Airlines in the 1970s. They never had any corporate value, but fetch $2,000 this year.
So, even if those shares aren't worth the paper they're printed on, that paper could someday be worth more than the stock itself ever was.
By Nicole St. Pierre in Washington
Edited by Douglas Harbrecht
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Copyright 2000, by The McGraw-Hill Companies Inc. All rights reserved.
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