Strategies for Managing Concentrated Equity Positions

 

Strategies for Managing Concentrated Equity Positions

 

We specialize in advising our clients with concentrated equity positions of one name, or a group of  securities, typically with a very low cost basis.  Though we offer a variety of strategies to consider, focusing on hedging, monetizing and diversification, the building-block of our approach is the use, when appropriate, of an Exchange Fund.

 

Exchange Funds are special-purpose funds that offer holders of concentrated stock positions the ability to diversify their investments by exchanging low-cost stock for shares of a diversified fund. Contributions of appreciated stock to a properly structured exchange fund are not taxable under current federal tax law and offer the benefit of diversification.

 

Considerations

  1. Investment Risk - The value of the shares of the fund may lose value
  2. Use of Leverage - The fund incorporates some leverage and the cost to borrow to finance that leverage may affect the performance of the fund
  3. Redemptions are typically met by distributing shares from the portfolio, which may or may not include shares originally contributed

Please contact Steve Marchel at stevemarchel@integrousfs.com or Tracy Santoro at tracysantoro@integrousfs.comfor more information, including the confidential discussion of other strategies.

Fund is only open to Accredited Investors or Qualified persons.

Exchange Traded Funds are subject to risks similar to those of stocks. Investment returns may fluctuate and are subject to market volatility, so that an investor's shares, when redeemed or sold, may be worth more or less than their original cost.

 

 

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