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Uploaded: Wednesday, July 11, 2012, 11:40 AM
Donated stock takes a dive
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by Dave Boyce
Almanac Staff
The town of Portola Valley has begun selling 100,000 shares of stock that were donated to the town to reserve naming rights for the renovated baseball field at Town Center.
In April 2008, the shares of CAMAC Energy -- now listed under CAK -- had a value of $2.3 million, but by the time selling restrictions were lifted, the stock had plunged in value, Councilman Ted Driscoll told the Almanac.
The town didn't need the cash and was advised to hold the stock, Mr. Driscoll said, adding: "In hindsight, I wish we had sold it earlier."
In May, the council authorized a broker to begin selling it. On June 25, the stock closed at 63 cents a share, according to an online quote. That would put the value of the donation at $63,000.
With naming rights for the ballfield set at $1 million, the field remains without one.
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Posted by downtowner, a resident of the Menlo Park: Central Menlo Park neighborhood, on Jul 11, 2012 at 12:20 pm Change financial advisors & tell us who gave you the bum advice so the rest of us can avoid that source.
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Posted by cornfused, a resident of another community, on Jul 11, 2012 at 12:27 pm This article is laughably lacking in the details a reader or taxpayer would want:
"but by the time selling restrictions were lifted, the stock had plunged in value, Councilman Ted Driscoll told the Almanac." what and when were the selling restrictions and when did the value plunge? 4 years is a long time since receipt.
"The town didn't need the cash and was advised to hold the stock" advised by whom?
Any one who has taken the most basic investing class knows the concept of a diversified portfolio, commonly known as "don't put all your eggs in one basket". They basically became gamblers in the market at that point. What could they possibly stand to gain from that approach? Who is responsible for oversight? Did the Town buy any Facebook stock?
Also re: naming rights, if the donor gave $2.3M of stock in exchange for naming rights, then they deserve naming rights. It isn't their fault that the Town gambled away the value subsequent to transfer (unless the value had plunged prior to the first opportunity to sell).
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Posted by upset, a resident of the Portola Valley: Central Portola Valley neighborhood, on Jul 11, 2012 at 1:04 pm Wow, very disappointing when our community can benefit. First the PV school finances compromised and now the town finances compromised. Lets pull together to ensure this won't happen again! Lets get 3 opinions from financial planners in the future.
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Posted by Common Sense, a resident of the Menlo Park: Downtown neighborhood, on Jul 11, 2012 at 1:10 pm The responsibility of the Town is to SELL the stock immediately upon receipt. Forget anyone's opinion on the matter, that is called speculation which has no place in this matter. You accept someone's generous donation and then watch it evaporate because you THOUGHT the stock would go higher??? Unforgivable.
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Posted by Charlie, a resident of the Woodside: Woodside Glens neighborhood, on Jul 11, 2012 at 1:21 pm Duh !! Embarrassed, yeah.
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Posted by menlores, a resident of the Menlo Park: Downtown neighborhood, on Jul 11, 2012 at 3:56 pm
menlores is a member (registered user) of Almanac Online GREEDY is a more appropriate title for the town.
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Posted by A. Person, a resident of the Woodside: other neighborhood, on Jul 11, 2012 at 4:48 pm Unfortunately this article does a poor job of answering a few basic and relevant questions, like: what was the first date that the stock could have been sold? And did the selling restrictions prohibit the town from purchasing put option protection?
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Posted by resident, a resident of the Portola Valley: other neighborhood, on Jul 12, 2012 at 6:38 am the donor gifted the stock in good faith - naming rights shouldn't be denied because of poor management of the money
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Posted by POGO, a resident of the Woodside: other neighborhood, on Jul 12, 2012 at 6:48 am "Common sense" is absolutely correct. You would think that Portola Valley's elite, with their proximity to the private equity firms on Sand Hill Road would know that.
When a private portfolio company of a venture firm goes public, they almost always distribute the stock to their limited partners immediately and value the asset at that price. The reason is that they (as PRIVATE equity managers) are no more qualified to manage a PUBLIC company stock than you are (much less, a city like Portola Valley). The newly public company stock may go up or down - and that gain or loss is attributed AFTER the distribution.
The person or entity that "donated" this stock to the city probably won big time because they likely received the fully appreciated value as a tax deduction. Portola Valley, on the other hand, gambled and lost.
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