What is a Concentrated Stock Position (CSP)?

What is a Concentrated Stock Position (CSP)?

April 15, 2021

What is a Concentrated Stock Position (CSP)?

One type of risk to an otherwise-diversified investment portfolio is a concentrated stock position (CSP). In brief, a concentrated stock position is any large accumulation of stock in one company relative to the investor’s total wealth. Longtime employees, executives, and early investors may end up with a significant percentage of their total investable assets “locked-up” in the one stock. 任何时候投资者的大部分资本都被一支股票所束缚, it presents risks to their investment strategy, namely through diversification risk, tax consequences, and liquidity. We help investors with concentrated stock positions intelligently manage the associated risks with the goal of smoothing out the large position into a well-diversified portfolio.

虽然对集中持股没有一个普遍接受的定义,但在芝加哥合伙人公司(Chicago Partners), we define a concentrated stock position as any investment in one stock that represents more than 15% of the investor’s total investable assets.

For example, 2000年投资苹果的人可能买了10个,000 shares at a split-adjusted price of $1. 通过苹果的成功和随后的资本增值, this savvy investor’s Apple position is worth about $1.3 million today. For the average investor, it is very likely this Apple position represents more than 15% of their total investable assets concentrated in one position.

While exceptional capital growth over the long term is one way an investor can end up with a concentrated stock position, 十大娱乐老平台通常会看到两种更常见的情景,为投资者生成CSP.

集中持股的两种常见方式

Long-Term Employment

For the “gold watch” employees whose tenure at their company has granted them a significant amount of equity through compensation, their ownership in the company will generally represent an outsized portion of their investment portfolio. Accumulating shares over the years is an excellent strategy for building wealth as long as the investor realizes the associated risks with the undiversified section of their portfolio.

Executive Compensation

One common incentive for management to focus on the long-term growth of a company is to include common stock in the manager’s total compensation package. 同时也是一个绝佳的机会,在壮大自己财富的同时,壮大企业, left unattended, the stock position can become a threat to their overall investment portfolio after their job is done.

For example, Gamestop CEO George Sherman held about 2.300万股Gamestop股票,作为他的高管薪酬的一部分. On January 29, he was faced with a significant 集中的股票头寸使他的股票价值推出超过9亿美元. Had Gamestop held this interplanetary price, 谢尔曼肯定会持有集中的股票头寸, as well as the risks that come with it.

The Risks of a Concentrated Stock Position

虽然股票的长期增长令人难以置信,但肯定是一个伟大的结果, 应该正确认识和管理其风险,以十大靠谱娱乐老平台其投资的财富. The three most poignant risks we’ve identified are diversification risk, risk from an increase in income taxes from capital gains, and the risk associated with low liquidity (due to the tax consequences).

Diversification Risk

The idea behind a diversified portfolio is to create a “hedge” against losses in any one specific company. A portfolio with assets spread across many investments is less affected by any one of those investments’ moves.

On the flip side, a concentrated or undiversified position has an increased sensitivity to sudden changes in the company itself (company risk), 公司从事业务的行业(行业风险), and overall market volatility (market risk).

  • 公司的变化可能是日常管理上的变化,也可能是意料之外的丑闻.

  • 在一个行业中,监管和消费者信任观念的改变可能会动摇整个行业. For CSP holders in Uber or Lyft, 整个行业仍存在员工重新分类的潜在威胁.

  • 而市场风险在一定程度上几乎总是存在于投资中, diversification out of a concentrated stock position can proactively position an investor to stay relatively more protected in the event of a larger-scale downturn.

Tax Planning & Long-Term Capital Gains Taxes

For the concentrated investment, the majority of shares have likely passed the one-year mark to move from short-term capital gains to long-term capital gains. 而目前的长期资本利得税低于短期资本利得税, it still can significantly affect an investor’s annual income in ways the investor may not appreciate.

如果投资者在其集中的头寸上积累了可观的资本收益, 他们选择在他们的位置上实现收益, 他们可能被迫处理增加的税单.

Low Liquidity & (More) Capital Gains Taxes

积累了大量的资本收益, 投资者可能不愿意出售他们的任何集中的股票. Again, 十大娱乐老平台看到了出售他们的头寸所带来的税收后果, which, 如果该头寸占了他们资产的很大一部分, may leave the investor feeling stuck.

We cover some strategies that may help mitigate the risk of capital gains taxes on concentrated positions below.

智能管理集中股票头寸的5个策略

The recent underperformance of the value style has also motivated investors to find ways to predict and avoid disappointing performance by timing their allocation to value vs. growth stocks. 对各种市场择时策略进行了大量的研究. These strategies try to forecast bull 而熊市的条件又为股票市场的广泛和特定风格.

Dimensional对680种策略进行了测试,找出了表现优于“买入并持有”策略的策略.[3] 如表2中所有680种策略的超额回报所示, underperformance was by far the most

likely outcome for these approaches to timing premiums. 少数获得成功的极右翼人士乍一看往往很有吸引力, but not robust to further testing.

Tax-Sensitive Diversification

适用于在应税投资帐户中持有大量股票的投资者, 税收损失收获是一种简单的方法,用已实现的损失来抵消已实现的收益. 为了正确地收获税收损失,投资者必须在30天内远离卖出的头寸. 点击这里,你可以找到十大娱乐老平台十大靠谱娱乐老平台税收损失收获的深入介绍.

Exchange Funds

Not to be confused with Exchange-Traded Funds (ETFs), an Exchange Fund allows an investor to “trade-in” some of their concentrated stock for a share in the larger Exchange Fund. 这种交易允许投资者在投资时分散头寸, at the same time, 避免实现会影响其应纳税收入的资本利得.

The idea behind an Exchange Fund is that many investors have concentrated stock positions they would like to diversify. A bank or other larger financial institution may create an Exchange Fund based on the characteristics of the securities. A small-cap Exchange Fund may be a good fit for an investor whose concentrated position lies in a small-cap company.

Once enough shares are contributed to the fund, the fund closes, and investors receive shares of the fund itself, 哪些是由许多投资者贡献自己集中的股票来分散的.

Direct Indexing

Direct indexing, 在投资者的投资组合中复制一个指数的做法, purchases stock in a direct proportion to an index. Because a direct index is made up of stocks, an investor can use tax-loss harvesting to offset some of the capital gains from the sale of their concentrated stock. Along with tax-loss harvesting, the direct index is typically well-diversified, 降低了集中头寸的分散风险.

Qualified Small Business Stock (QSBS)

一些公司的投资者可能持有合格小企业股票(QSBS). QSBS给投资者带来了一系列好处, 哪些可以帮助减少或消除股票出售时的资本利得税.

要将一只股票视为QSBS,有几个必要条件. 该公司必须是c公司,并且必须在1993年8月10日后发行股票. 投资者必须直接从该公司购买股票, 投资的总税基必须低于5000万美元.

Investors with QSBS may qualify for 10x their original cost basis (the original investment amount in dollars) or $10 million of exemption per taxpayer.

Donor Advised Funds

另一个帮助减少CSP并将其税收负担降到最低的选择是利用 Donor Advised Fund (DAF). In this scenario, the client will donate a portion of the concentrated shares into a Donor Advised Fund that they set up and maintain direct control over. The client will receive a tax deduction for a charitable contribution for the fair market value of the shares donated to the DAF.

The donation helps offset the tax burden generated from other shares of the CSP that are sold outside of the DAF. 然后客户用出售股票的收益来分散他们的投资, and can use the DAF to provide grants to charities that they want to support at the timing that works for them.

For more information on how to build an investment strategy around a concentrated stock position, please reach out to one of our advisors.


Important Disclosure Information

过去的表现不一定代表未来的结果. 不同类型的投资涉及不同程度的风险, 而且也无法保证任何特定投资的未来表现, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Chicago Partners Investment Group LLC (“CP”), or any non-investment related content, 在本评注中直接或间接的提及将是有益的, 等于任何相应的历史表现水平, be suitable for your portfolio or individual situation, or prove successful. Due to various factors, 包括不断变化的市场条件和/或适用法律, 内容可能不再反映当前的观点或立场. Moreover, you should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from CP. Please remember to contact CP, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, 或修改对本公司投资顾问服务的任何合理限制. CP is neither a law firm nor a certified public accounting firm and no portion of the commentary content should be construed as legal or accounting advice. A copy of the CP’s current written disclosure Brochure discussing our advisory services and fees continues to remain available upon request.

April 15, 2021

What is a Concentrated Stock Position (CSP)?

One type of risk to an otherwise-diversified investment portfolio is a concentrated stock position (CSP). In brief, a concentrated stock position is any large accumulation of stock in one company relative to the investor’s total wealth. Longtime employees, executives, and early investors may end up with a significant percentage of their total investable assets “locked-up” in the one stock. 任何时候投资者的大部分资本都被一支股票所束缚, it presents risks to their investment strategy, namely through diversification risk, tax consequences, and liquidity. We help investors with concentrated stock positions intelligently manage the associated risks with the goal of smoothing out the large position into a well-diversified portfolio.

虽然对集中持股没有一个普遍接受的定义,但在芝加哥合伙人公司(Chicago Partners), we define a concentrated stock position as any investment in one stock that represents more than 15% of the investor’s total investable assets.

For example, 2000年投资苹果的人可能买了10个,000 shares at a split-adjusted price of $1. 通过苹果的成功和随后的资本增值, this savvy investor’s Apple position is worth about $1.3 million today. For the average investor, it is very likely this Apple position represents more than 15% of their total investable assets concentrated in one position.

While exceptional capital growth over the long term is one way an investor can end up with a concentrated stock position, 十大娱乐老平台通常会看到两种更常见的情景,为投资者生成CSP.

集中持股的两种常见方式

Long-Term Employment

For the “gold watch” employees whose tenure at their company has granted them a significant amount of equity through compensation, their ownership in the company will generally represent an outsized portion of their investment portfolio. Accumulating shares over the years is an excellent strategy for building wealth as long as the investor realizes the associated risks with the undiversified section of their portfolio.

Executive Compensation

One common incentive for management to focus on the long-term growth of a company is to include common stock in the manager’s total compensation package. 同时也是一个绝佳的机会,在壮大自己财富的同时,壮大企业, left unattended, the stock position can become a threat to their overall investment portfolio after their job is done.

For example, Gamestop CEO George Sherman held about 2.300万股Gamestop股票,作为他的高管薪酬的一部分. On January 29, he was faced with a significant 集中的股票头寸使他的股票价值推出超过9亿美元. Had Gamestop held this interplanetary price, 谢尔曼肯定会持有集中的股票头寸, as well as the risks that come with it.

The Risks of a Concentrated Stock Position

虽然股票的长期增长令人难以置信,但肯定是一个伟大的结果, 应该正确认识和管理其风险,以十大靠谱娱乐老平台其投资的财富. The three most poignant risks we’ve identified are diversification risk, risk from an increase in income taxes from capital gains, and the risk associated with low liquidity (due to the tax consequences).

Diversification Risk

The idea behind a diversified portfolio is to create a “hedge” against losses in any one specific company. A portfolio with assets spread across many investments is less affected by any one of those investments’ moves.

On the flip side, a concentrated or undiversified position has an increased sensitivity to sudden changes in the company itself (company risk), 公司从事业务的行业(行业风险), and overall market volatility (market risk).

  • 公司的变化可能是日常管理上的变化,也可能是意料之外的丑闻.

  • 在一个行业中,监管和消费者信任观念的改变可能会动摇整个行业. For CSP holders in Uber or Lyft, 整个行业仍存在员工重新分类的潜在威胁.

  • 而市场风险在一定程度上几乎总是存在于投资中, diversification out of a concentrated stock position can proactively position an investor to stay relatively more protected in the event of a larger-scale downturn.

Tax Planning & Long-Term Capital Gains Taxes

For the concentrated investment, the majority of shares have likely passed the one-year mark to move from short-term capital gains to long-term capital gains. 而目前的长期资本利得税低于短期资本利得税, it still can significantly affect an investor’s annual income in ways the investor may not appreciate.

如果投资者在其集中的头寸上积累了可观的资本收益, 他们选择在他们的位置上实现收益, 他们可能被迫处理增加的税单.

Low Liquidity & (More) Capital Gains Taxes

积累了大量的资本收益, 投资者可能不愿意出售他们的任何集中的股票. Again, 十大娱乐老平台看到了出售他们的头寸所带来的税收后果, which, 如果该头寸占了他们资产的很大一部分, may leave the investor feeling stuck.

We cover some strategies that may help mitigate the risk of capital gains taxes on concentrated positions below.

智能管理集中股票头寸的5个策略

The recent underperformance of the value style has also motivated investors to find ways to predict and avoid disappointing performance by timing their allocation to value vs. growth stocks. 对各种市场择时策略进行了大量的研究. These strategies try to forecast bull 而熊市的条件又为股票市场的广泛和特定风格.

Dimensional对680种策略进行了测试,找出了表现优于“买入并持有”策略的策略.[3] 如表2中所有680种策略的超额回报所示, underperformance was by far the most

likely outcome for these approaches to timing premiums. 少数获得成功的极右翼人士乍一看往往很有吸引力, but not robust to further testing.

Tax-Sensitive Diversification

适用于在应税投资帐户中持有大量股票的投资者, 税收损失收获是一种简单的方法,用已实现的损失来抵消已实现的收益. 为了正确地收获税收损失,投资者必须在30天内远离卖出的头寸. 点击这里,你可以找到十大娱乐老平台十大靠谱娱乐老平台税收损失收获的深入介绍.

Exchange Funds

Not to be confused with Exchange-Traded Funds (ETFs), an Exchange Fund allows an investor to “trade-in” some of their concentrated stock for a share in the larger Exchange Fund. 这种交易允许投资者在投资时分散头寸, at the same time, 避免实现会影响其应纳税收入的资本利得.

The idea behind an Exchange Fund is that many investors have concentrated stock positions they would like to diversify. A bank or other larger financial institution may create an Exchange Fund based on the characteristics of the securities. A small-cap Exchange Fund may be a good fit for an investor whose concentrated position lies in a small-cap company.

Once enough shares are contributed to the fund, the fund closes, and investors receive shares of the fund itself, 哪些是由许多投资者贡献自己集中的股票来分散的.

Direct Indexing

Direct indexing, 在投资者的投资组合中复制一个指数的做法, purchases stock in a direct proportion to an index. Because a direct index is made up of stocks, an investor can use tax-loss harvesting to offset some of the capital gains from the sale of their concentrated stock. Along with tax-loss harvesting, the direct index is typically well-diversified, 降低了集中头寸的分散风险.

Qualified Small Business Stock (QSBS)

一些公司的投资者可能持有合格小企业股票(QSBS). QSBS给投资者带来了一系列好处, 哪些可以帮助减少或消除股票出售时的资本利得税.

要将一只股票视为QSBS,有几个必要条件. 该公司必须是c公司,并且必须在1993年8月10日后发行股票. 投资者必须直接从该公司购买股票, 投资的总税基必须低于5000万美元.

Investors with QSBS may qualify for 10x their original cost basis (the original investment amount in dollars) or $10 million of exemption per taxpayer.

Donor Advised Funds

另一个帮助减少CSP并将其税收负担降到最低的选择是利用 Donor Advised Fund (DAF). In this scenario, the client will donate a portion of the concentrated shares into a Donor Advised Fund that they set up and maintain direct control over. The client will receive a tax deduction for a charitable contribution for the fair market value of the shares donated to the DAF.

The donation helps offset the tax burden generated from other shares of the CSP that are sold outside of the DAF. 然后客户用出售股票的收益来分散他们的投资, and can use the DAF to provide grants to charities that they want to support at the timing that works for them.

For more information on how to build an investment strategy around a concentrated stock position, please reach out to one of our advisors.


Important Disclosure Information

过去的表现不一定代表未来的结果. 不同类型的投资涉及不同程度的风险, 而且也无法保证任何特定投资的未来表现, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Chicago Partners Investment Group LLC (“CP”), or any non-investment related content, 在本评注中直接或间接的提及将是有益的, 等于任何相应的历史表现水平, be suitable for your portfolio or individual situation, or prove successful. Due to various factors, 包括不断变化的市场条件和/或适用法律, 内容可能不再反映当前的观点或立场. Moreover, you should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from CP. Please remember to contact CP, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, 或修改对本公司投资顾问服务的任何合理限制. CP is neither a law firm nor a certified public accounting firm and no portion of the commentary content should be construed as legal or accounting advice. A copy of the CP’s current written disclosure Brochure discussing our advisory services and fees continues to remain available upon request.