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GregAlex
In my ongoing quest to build the cheapest yet most eclectic accumulation of stocks and bonds, I frequently come across certificates that don't quite fit the definition of either. I thought it might be interesting to give these their own topic and maybe other members can contribute. Some of these are puzzlers, so I'm hoping YoungCollector or any of our other fiduciary experts can better explain their purposes.

First a couple insurance items. These are "Certificates of Profit" -- apparently issued annually. Did the insurance companies raise capital by selling a percentage of their yearly profits?
Atlantic Mutual Insurance profit cert.jpg  Union Mutual Insurance cert.jpg 
This one seems pretty straightforward -- a transfer certificate for stock shares from one party to another. Usually this was done on the back of the stock certificate itself.
First National Springfield transfer cert.jpg 
I think these two smaller items served the same purpose. One is a Debt Certificate for the NY Central & Hudson River RR, the other an "agreement" attached to a bond of the B&O Railroad. There's a lot of fine print, but I think these both extend the terms of the bond for additional years.
NYC&H Extended debt certificate.jpg  B&O RR bond agreement.jpg 
Bond scrip is, I think, a fractional portion of a bond -- in this case $333.34 or 1/3 of a $1000 bond. But I'm not clear on why something like this would be issued.
CW&B RR Bond Scrip.jpg 
And here is a scrip certificate for stock. This one states that 75 percent of the par value has been paid. It seems to be a receipt for a down payment, with the full shares forthcoming when the final 25 percent is paid off. Again, the reason for this is puzzling.
Quincy Mining scrip cert.jpg 
And lastly, a certificate for Trust Shares. If I'm not mistaken, this appears to be an early form of a mutual fund. The back lists all the collective stocks held in trust, and the shareholders of this "fund" collected semi-annual distributions.
North Am Trust Shares.jpg  North Am Trust Shares back.jpg 
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YoungCollector
Without being able to explain these specific items, I can add enough information for some informed speculation.

Let me start with the "old paradigm" for Joint Stock company ownership.
A company would traditionally raise money in bonds and shares.  Each was priced at "par" or $100.  When the company made profits it first paid the bond holders their stated rate of return.  The excess profit (dividends) went to the equity share holders.  In the imagined view, the amount of profit would be such the equity shares would continue to trade around $100 - moving "above par" when profits were good, and "below par" when profits were bad.  Bonds would typically trade in lots of $1000 par value and shares would trade in lots of 100 shares.  The bonds would sometimes have paper coupons you could clip, and sometimes you would present the bond itself for payment.  

This opens up a need for certain documents.  For example, one might want to buy or sell the interest or dividends while continuing to hold the stock or bond.  One might also wish to sell a fraction of one's bond or stock holdings.  For example, you might have a single certificate for 100 shares.  You might be also to sell, say, 10 shares of that against the 100 you hold.  The alternative would be to have the record agent break your 100 share certificate down into a 90 and a 10.  But that might be too much of a hassle, or might take too long. 

For "mutual" companies, like insurance companies, it might go like this ... The insured were also the owners.  The owners staked-up capital, which was invested, and the profits were used to pay insurance claims.  To the extent that profits exceeds claims, all the mutual holders would be paid a share of the excess.

Your "75 precent of par" certificate is possibly the result of a "rights offering".  So, let's say a company wants to raise for money, but the existing shareholders do not want to see their control diluted.  In such a case the company can issue the "right" to buy new shares to the existing shareholders at some kind of ratio.  They might, for example, say you can buy one new share for every five that you own.  Then they can "call in" 75 percent of the money they intend to raise and issue you a certificate for that payment.  Then, you can either pay the 25 percent due later and get your share or, perhaps, sell the certificate to somebody else who will pay the remaining 25 percent and collect a share.  This can be pretty handy if the company is in distress and needs money quickly and the shares trade at a discount to par.  In this case, you hold the certificate until the company recovers and then you sell it off at a rich price without having diluted control during the process.

I could prattle on, but I hope this sheds some light on the above documents.

The first few paragraphs of this help give us a feel of pre-1973 Wall Street:  https://en.wikipedia.org/wiki/Depository_Trust_%26_Clearing_Corporation#History

"Stock certificates were left for weeks piled haphazardly on any level surface, including filing cabinets and tables."

Note: even today the concept of ownership of securities is exceedingly complex.
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GregAlex
Great explanations! And the Wiki article was very informative, too.

Okay, here are a couple more. I think the AT&T warrant specimen is essentially a stock option -- is that correct? The Coupon Treasury Receipt (which is not mine) is beyond me.

AT&T Warrant.jpg 
Coupon Treasury Receipt.jpg 
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mikelaw
Interesting. Feels like I’m in some type of finance class. Anyway, the vignettes are very cool. Thanks. 
Mike
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YoungCollector
Greg - The first item is, basically a stock option.  Warrants are, more or less, stock options issued by the same company that issues the stock, and they are issued for the purpose of raising money for the company and result in dilution of the common shareholders when they are exercised - which generally only will happen when the company is going well.  If the company does poorly the warrant is not exercised and the company gets to pocket the warrant price for nothing.

The second item is a common form of zero coupon bond synthetically manufactured, in this case, by state street.
In this case, in the year 1984, state street bought up a bunch of US Treasury bonds that matured in 2013 (and had been issued in 1983 as 30 year bonds).
State street created an SPV, or a Special Purpose Vehicle, a company whose sole purpose was to own these US Treasury bonds and distribute their payments according to the company's operating instructions.
These bonds paid interest twice a year - in Feb and in August.
This certificate entitles the holder to receive cash resulting from the interest payment to be made in August 2001.
Because the SPV holds the bonds and does nothing else, the money is just as safe as a US treasury bond.
However, for investors who have the need to receive a one time payment (rather than on-going interest payments and a bullet payment at the end) this fits the bill for them.
This particular zero will pay out of the interest on a specific bond.  Other zero's pay from the final repayment at maturity.  Some zero's promise only UST interest, but don't say from which bond it will come.
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GregAlex
This really is a master class in financial instruments! Thanks for all the info, Paul. There probably aren't many members as wonky as me, but I find this stuff fascinating. I wonder if there are certificates for credit default swaps. 😁
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YoungCollector
GregAlex wrote:
I find this stuff fascinating.


You missed out on a career as an investment banker ... the rare person who found themselves fascinated by this stuff 30 years ago later found themselves picking through spread eagles and their micro-type to fill out their currency collection Ã°Å¸â„¢Ë†
In 1984 you could buy $1 billion of UST bonds for $950mm ... then chop them up and sell them off with "coupon treasury receipts" and, when all the receipts were sold you had $960mm - for a nice little profit of $10mm ... those were the days!
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GregAlex
Okay, here's another one -- a scrip certificate for subscription to capital stock. Obviously, this is another scheme for selling shares, apparently on the installment plan. The fine print seems pretty labyrinthine.

Scrip for subscription.jpg
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GregAlex
So what is a Voting Trust Certificate? Looks pretty much like a stock certificate to me.
Missouri-Kansas Pipe Line specimen.jpg 
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Dan Cong
There are various methods of keeping control and preventing rogue investors from buying enough stock to force their prefered changes. 

https://www.investopedia.com/terms/v/voting-trust-certificate.asp

DEFINITION of Voting Trust Certificate

voting trust certificate is a document issued by a limited-life trust of a corporation established to give temporary voting control of a corporation to one or a few individuals. A voting trust certificate is issued to a stockholder in exchange for his or her common stock, and represents all of the normal rights of a shareholder (e.g., receiving dividends) except the right to vote. The life of a voting trust certificate in many cases ranges from two to five years, at which point the common stock, with voting rights, is returned to the shareholder.

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Dan Cong
1885 KAW LIFE ASSOCIATION $5000 POLICY -MARSHALLTOWN IA IOWA ADVERTISI.jpg  1885 KAW LIFE ASSOCIATION $5000 POLICY -MARSHALLTOWN IA IOWA ADVERTISI.jpg  1885 KAW LIFE ASSOCIATION $5000 POLICY -MARSHALLTOWN IA IOWA ADVERTISI.jpg  1885 KAW LIFE ASSOCIATION $5000 POLICY -MARSHALLTOWN IA IOWA ADVERTISI.jpg  1885 KAW LIFE ASSOCIATION $5000 POLICY -MARSHALLTOWN IA IOWA ADVERTISI.jpg It was pretty cheap and I really like the illustrations
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GregAlex
Okay, here's one that really is a stock certificate, but nothing like I've seen before. I understand the concept of Preferred Shares (these get preferential treatment should a company go bankrupt). But what exactly is 6 Percent Convertible Preferred Stock?

Six percent convertible stock.jpg 
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YoungCollector
If a company goes bankrupt then preferred shareholders are SOOL.  Preferred shareholders don't get to vote, but their dividend payments are a fixed amount which must be paid before common get anything - but this assumes the company is paying dividends and, thus, not bankrupt.  A company can pay no dividends at all and not be bankrupt - but if it doesn't pay the coupons on its bonds then it is bankrupt and the bondholders take over and say bye-bye to preferred and common shareholders.

Preferred shares are often callable - which means the company can buy them back at will for some premium over face value.
However preferred shares can also be convertible which means the preferred holders have an option to convert them into common.  Dividend yields for callable preferred will tend to be higher, and those on convertible preferred will tend to be lower.

The government is always tinkering with capital regulations and you can get all types of securities as people adapt to how to best meet the requirements.  Also, expected corporate actions, like mergers and acquisitions, can lead to weird securities as well.
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GregAlex
Gees, I was way off on what I thought "preferred" meant! Thanks for the lesson.

What do you think the six percent indicated?
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Dan Cong
I would assume the 6% is the guaranteed dividend. In bad times, the common stock might not pay a dividend, in good times the common stock will both appreciate (share price goes up) as well as have larger dividends.  Then you have the ability to "convert" your preferred into common at a fixed rate. 
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YoungCollector
Six percent was a nice dividend at that time, probably too high for a convert, so I am guessing some sort of distress in those early depression days.
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