Concentrated Stock Comprehensive Guide eBook PDF version - Page 2

From the desk of

King Lip, CFA, CMT

Read why should you take action on your concentrated stock or highly apprecatiated assets.

Owning a large stock position can create investment and planning challenges because relying on one company to achieve your financial goals generally risks the overall portfolio valuation, increases volatility, reduces liquidity, and leaves the portfolio vulnerable to sector slowdowns or adverse regulations. Large setbacks by the company could jeopardize long-term financial plans. And if you work for the company of the concentrated position, your job could be at risk at the same time the stock loses value. Having your income and wealth in one company puts a lot of eggs in one basket.

A concentrated position occurs when you own shares of a stock that represent a large percentage of your overall portfolio. Your wealth is concentrated in that one position. A position is often considered to be concentrated when it represents 10% or more of one’s portfolio.

Chief Strategist

1. New IPOs tend to see prices strengthen prior to the quiet period expiration

2. And their prices can weaken before the lock-up expiration

3. Stock tends to rebound post lock-up

4. Early earnings results determine likelihood of success

5. Continued high short interest should be monitored

What is a Concentrated Stock Position?

What to Expect at Lock- Up Period?

Decision to Keep or Take Action?

In this guide, we provide an overview on strategies to maximize the value of your concentrated stock position and ISOs. We can also provide more in-depth analysis to address commonly asked questions around when to exercise your stocks, what to expect at lock- up expiration, and explore a few paths you can take to ensure that you get to reduce your tax exposure.

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