Too Much of a Good Thing: Managing Concentrated Holdings

Michael J. Nathanson (), Jeffrey T. Craig (), Jennifer A. Geoghegan (), Nadine Gordon Lee (), Michael A. Haber (), Max B. Haspel (), Seth P. Hieken (), Matthew C. Ilteris (), D. Scott McDonald (), Joseph A. Salvati () and Stephen R. Stelljes ()
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Michael J. Nathanson: The Colony Group
Jeffrey T. Craig: The Colony Group
Jennifer A. Geoghegan: The Colony Group
Nadine Gordon Lee: The Colony Group
Michael A. Haber: The Colony Group
Max B. Haspel: The Colony Group
Seth P. Hieken: The Colony Group
Matthew C. Ilteris: The Colony Group
D. Scott McDonald: The Colony Group
Joseph A. Salvati: The Colony Group
Stephen R. Stelljes: The Colony Group

Chapter 11 in Personal Financial Planning for Executives and Entrepreneurs, 2021, pp 167-179 from Springer

Abstract: Abstract Having a concentrated stock or other ownership position is common for corporate executives, offering many potential rewards but also substantial risks. The “right” stock can be a significant wealth creator, but concentrating in a single position can become a wealth destroyer. There are many disciplines and techniques that should be considered to address the risks of concentration, though each has its advantages and disadvantages. A gradual diversification strategy often works best, though factors such as taxes, risk tolerance, time horizon, and legal restrictions must be considered. Various tax-reduction strategies are available to manage the tax costs of any sales. There are also several hedging strategies that should be considered, along with the potential use of exchange funds or charitable vehicles.

Date: 2021
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DOI: 10.1007/978-3-030-65400-9_11

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