Turning Over Concentrated Stock Positions into Income

An investor with more than 60% of her net worth in a single stock used a concentrated stock strategy combining a protective collar, a securities-backed loan, and a private infrastructure fund. The strategy was designed to manage downside risk, access liquidity without an immediate stock sale, and generate potentially tax-advantaged income while retaining the concentrated position.

A Client’s Concentrated Stock Problem

One of our clients came to us with a problem that many successful investors face. She had built significant wealth, but nearly all of it was tied up in a single stock. Google represented more than 60% of her net worth. She knew the risk. She was an investor in 1999-2000 when the rally ended for tech stocks. But she also knew that selling meant handing a large portion of her gains to the IRS.

Setting Clear Goals: Reduce Risk, Generate Income, Avoid Taxes

Her goals were straightforward. She wanted to reduce her exposure to Google, generate meaningful income from her assets, and do it all without triggering a taxable event. That is a tall order. But with the right strategy, it is achievable.

Step One: Implementing a Collar

We started by implementing a collar on her Google position. A collar involves buying a put option to protect against downside and selling a call option to help fund that protection. We structured hers with a maximum drawdown of 10%, giving her a clearly defined floor. She still had upside participation, but her catastrophic risk was essentially eliminated.

Step Two: Borrowing Against the Protected Position

Here is where it gets interesting. Because the collar protected the value of her position, she was able to use those shares as collateral and borrow against them. She did not sell. She did not recognize a gain. She simply unlocked the capital that had been sitting idle in a single concentrated position.

Step Three: Deploying Capital into Private Infrastructure

We then deployed those borrowed funds into a private infrastructure fund. Infrastructure assets, think toll roads, energy pipelines, and utilities, generate steady, predictable cash flow. This particular fund was yielding 10% annually, and almost all of that income was sheltered from current taxes due to depreciation and other structural benefits.

The Result: A Transformed Portfolio

The result was a transformed portfolio. Her Google exposure remained intact for now, protected from a sharp decline. She was generating meaningful tax-advantaged income she had never had before. And she accomplished all of it without writing a check to the IRS.

This is what sophisticated planning looks like. If you have a concentrated position in a particular stock there are ways to reduce overconcentration risk.

Singer Wealth Advisors is a registered investment advisory firm. Discuss with your financial/tax professionals before investing. Investing involves risk. Past performance does not guarantee future results. Material provided for informational purposes only.

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