Steve Stroud, Senior Wealth Manager for Three Bell Capital, joined Julie Cooling, Founder and CEO of RIA Channel, to discuss the firm’s active management strategy for concentrated stock positions.
While concentrated stock holdings can appreciate over time, Stroud notes that clients’ needs may shift. In his experience, clients often need their stock to produce income. Some may look toward traditional strategies, such as covered call writing, however Stroud notes that these strategies may come with downsides. For example, if a stock rises above the strike price, it may be called away, triggering taxes and putting the client in an undesirable position. Over the years, Three Bell Capital has developed a hands-on solution shaped around each client’s specific needs.
Stroud highlights that the solution provides absolute protection, ensuring the firm will not sell the client’s shares. To prevent the stock from being called away, Three Bell uses deep fundamental research and technical analysis. To protect against market surprises, Stroud says active management plays a critical role, including rolling options when stocks are at risk of being called away.
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