Stock Concentration Risk Strategies

Single stock concentration is common for business owners, public company executives and high net worth families.  An owner of appreciated stock has two distinct challenges. The first is concentration risk commonly known as “all your eggs in one basket” and the second is the tax liability which is increasingly onerous.

Fortunately, there are several strategies to manage this risk and tax exposure including:

  • Options
  • Proxy hedging using short stock positions (“box” strategies)
  • Exchange Funds
  • Protection Funds

Using any of the available strategies, your goals may include:

  • Preservation of capital
  • Maintaining upside potential
  • Deferral, minimization or elimination of tax exposure
  • Diversification
  • Generational wealth transfer
  • Charitable gift planning

Learn More

Read more about why to hire a CFA here.