STEPS for Reducing Concentrated Stock Exposure

In our recent co-authored white paper, Michael Crook, Chief Investment Officer, and Michael LoCasale, Director, Investment Strategy, discussed how concentrated, low-basis stock positions can increase portfolio volatility and stock-specific risk. While realizing capital gains taxes is often a key concern, evaluating the tradeoff over a multi-year horizon may provide additional perspective. Using forward-looking capital market assumptions, they analyze the potential impact of diversification relative to estimated tax costs. These analyses are illustrative, based on modeled assumptions, and are not guarantees of future results.

Our STEPS framework highlights potential planning tools:

  • Structuring – Hedging or partially monetizing positions
  • Tax Efficiency – Managing gains, losses, and tax lots
  • Exchange – Considering exchange fund or 351 structures, where appropriate
  • Planned Giving – Incorporating charitable strategies
  • Stacking – Combining strategies based on individual circumstances

All strategies involve risks, costs, and tax considerations. Diversification and asset allocation do not guarantee a profit or protect against loss.

If this topic may apply to you, we encourage you to connect with your advisor to evaluate your specific objectives, tax situation, and risk tolerance before taking action.

STEPS for Reducing Concentrated Stock Exposure

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Disclosures & Important Information

Any views expressed above represent the opinions of Mill Creek Capital Advisers ("MCCA") and are not intended as a forecast or guarantee of future results. This information is for educational purposes only. It is not intended to provide, and should not be relied upon for, particular investment advice. This publication has been prepared by MCCA. The publication is provided for information purposes only. The information contained in this publication has been obtained from sources that

MCCA believes to be reliable, but MCCA does not represent or warrant that it is accurate or complete. The views in this publication are those of MCCA and are subject to change, and MCCA has no obligation to update its opinions or the information in this publication. While MCCA has obtained information believed to be reliable, MCCA, nor any of their respective officers, partners, or employees accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents.

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