Special Episode: Managing Your Concentrated Stock
Since the concentrated stock dilemma has become increasingly common for investors, including guests on Tech Founder Unlocks Liquidity for Her Next Big Bet and Future-Proofing a One-Stock Windfall episodes earlier this season, we’ve asked two specialists at Morgan Stanley to share their expertise on how to address it. In this special episode, host Jamie Roô speaks with Meghan Mahoney, head of Morgan Stanley’s Concentrated Equity Specialist team, and Steve Edwards, head of Portfolio Construction and Cross-Asset Strategies, about a menu of strategies to manage a concentrated stock position. They discuss why investors often hesitate to diversify, walk through the HOPES framework of Hold, Options, Planned giving, Exchange funds and Sell, and explain how Morgan Stanley’s proprietary analytics help tailor a plan to each investor’s goals.DISCLOSURESThis material has been prepared for informational and educational purposes only. It does not provide individually tailored investment advice and has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. The strategies and products discussed may not be appropriate for all investors.The views and opinions expressed are those of the speakers as of the date of recording, are subject to change without notice and may differ from those of other Morgan Stanley employees or affiliates. Morgan Stanley is not obligated to update the information presented.This material does not constitute an offer to sell or a solicitation of an offer to buy any security, financial instrument, investment product or strategy. Investors should carefully consider their objectives, risks, charges and expenses and consult their Morgan Stanley Financial Advisor before implementing an investment strategy.Investing involves risk, including the possible loss of principal. A concentrated position may be subject to greater volatility and risk of loss than a diversified portfolio. Diversification and asset allocation do not assure a profit or protect against loss in declining financial markets.References to the percentage of net worth that may constitute a concentrated position, the proportion of portfolio risk that may be attributable to a single security, relative volatility, strategy allocations and other numerical examples are general, illustrative and may not apply to a particular investor, security or portfolio. Actual risks and results depend on the security, market conditions, portfolio composition and the investor’s individual circumstances.Past performance is not a guarantee of future results. A security that has appreciated in the past may decline in value, and there is no assurance that any security, investment strategy or portfolio will achieve its objective.Indexes are unmanaged and do not include fees, expenses or sales charges. It is not possible to invest directly in an index. References to an index are provided for general comparative or explanatory purposes only.HOPES for Concentrated EquityMorgan Stanley does not provide legal or tax advice. Neither the HOPES Special Report, HOPES Information Request, HOPES for Concentrated Equity Tool nor the HOPES Tool Output Reports (together, “HOPES Materials”) constitute recommendations, investment strategies or advice. Any terms and/or pricing of any products included in the HOPES Materials are indicative, hypothetical and may not be available. Morgan Stanley, including through its Financial Advisors, does not provide recommendations or advice on any prepaid variable forward products discussed in the HOPES Materials. Please note that this is not an all-inclusive list of the features of the products discussed above and not all clients are eligible for these products. To the extent clients are subject to any company trading policies or restrictions that govern their holding of company shares, or the potential sale, hedging or other transactional activity related to such shares, it is the clients’ responsibility to confirm whether the scenarios described in the HOPES Materials are consistent with and permitted by such policies or restrictions, as Morgan Stanley provides no view on whether any such policies or restrictions may limit or prohibit the scenarios described therein.Before engaging in the purchase or sale of options, clients should understand the nature and extent of their rights and obligations and be aware of the risks involved, including, without limitation, the risks pertaining to the business and financial condition of the issuer of the underlying security/instrument. Options investing, like other forms of investing, involves tax considerations, transaction costs and margin requirements that can significantly affect clients’ potential profits and losses. The transaction costs of options investing consist primarily of commissions (which are imposed in opening, closing, exercise and assignment transactions) but may also include margin and interest costs in particular transactions. Transaction costs are especially significant in options strategies calling for multiple purchases and sales of options, such as multiple leg strategies, including spreads, straddles and collars. If a client is considering engaging in options trading, the Financial Advisor and Private Wealth Advisor are required to provide the client with the "Characteristics and Risks of Standardized Options" (ODD) booklet from the Options Clearing Corporation. Clients should not enter into options transactions until they have read and understood the Disclosure Document, and discussed transaction costs with the Financial Advisor or Private Wealth Advisor. A copy of the ODD is also available online at: http://www.theocc.com/about/publications/publication-listing.jspAny analyses, forecasts, estimates, illustrations, probability-of-success calculations, suggested allocations or projected outcomes produced by proprietary tools or discussed in this material are hypothetical, rely on assumptions and information available when prepared and are not guarantees of future performance or results. Actual outcomes may differ materially. Tool outputs may not reflect all fees, expenses, taxes, liquidity constraints, market conditions, legal restrictions or other factors that could affect an investor’s results.References to characteristics that may make a stock more susceptible to drawdowns, including volatility, financial stability and company fundamentals, do not constitute a prediction that a security will decline or an assurance that a security identified as less susceptible will avoid a decline. Security-level and portfolio analytics are subject to model, data and assumption limitations.Before engaging in the purchase or sale of options, clients should understand the nature and extent of their rights and obligations and the risks involved, including risks relating to the business and financial condition of the issuer of the underlying security or instrument. Options are not appropriate for all investors.Options transactions involve tax considerations, transaction costs and, in certain circumstances, margin requirements that can significantly affect potential profits and losses. Costs may include commissions, margin and interest expenses and may be particularly significant for multi-leg strategies, including spreads, straddles and collars. Options intended to generate income or mitigate downside risk may limit participation in appreciation and may not provide complete protection against loss.Comparisons of options to insurance are illustrative only. Options are not insurance products, may expire without value, may not offset losses in the underlying security and may introduce market, liquidity, counterparty, basis, tax and execution risks.Clients should not enter into options transactions until they have received, read and understood the Options Clearing Corporation’s Characteristics and Risks of Standardized Options and discussed the risks and transaction costs with their Financial Advisor or Private Wealth Advisor. The document is available from the Options Clearing Corporation at www.theocc.com.Prepaid forward transactions and similar monetization strategies are complex and may involve market, liquidity, counterparty, collateral, early-termination, settlement, legal and tax risks. Such transactions may limit future appreciation in the underlying securities, and their intended tax treatment is not assured. These transactions may not be available or appropriate for all investors.Charitable-giving, donor-advised fund, split-interest charitable vehicle and estate-planning strategies involve complex legal, tax and administrative considerations. Morgan Stanley, its affiliates and Morgan Stanley Financial Advisors do not provide tax or legal advice. Individuals should consult their personal tax and legal advisors before implementing any charitable-giving, estate-planning or tax-management strategy.A contribution of appreciated securities may be irrevocable and is subject to the recipient organization’s acceptance policies, applicable deduction limitations, holding-period and substantiation requirements, valuation rules and other restrictions. The availability and amount of any charitable deduction depend on the donor’s circumstances and applicable law. References to a “full charitable deduction” or avoiding recognition of gain are general and do not guarantee a particular deduction or tax result.Donor-advised fund sponsors generally have legal control over contributed assets, and donors retain advisory privileges only. Recommendations regarding grants and investments are subject to the sponsoring organization’s policies and approval. Split-interest charitable vehicles may involve costs, ongoing administration, actuarial assumptions, investment risk and restrictions on the use and disposition of contributed assets. Any income stream may fluctuate and is not guaranteed unless expressly provided by the applicable vehicle.Exchange funds are private investment vehicles available only to investors who satisfy applicable eligibility and suitability requirements. References to qualified-purchaser status, investment-asset thresholds and holding periods are general descriptions; actual eligibility and terms are governed by applicable law and the fund’s offering documents.Exchange funds may be illiquid, may require substantial holding periods and may impose significant restrictions on withdrawals, transfers and redemptions. They charge fees and expenses and are subject to investment, market, concentration, manager, liquidity, valuation, regulatory and tax risks. Contributions may be rejected, and securities distributed from a fund may differ from those contributed and may themselves present concentration, liquidity or other risks.Contributions to and distributions from an exchange fund may have tax consequences. Exchange funds generally seek to defer, rather than eliminate, recognition of gain. There is no assurance that an exchange fund will achieve its investment objective, track an intended benchmark, provide the intended diversification or receive the anticipated tax treatment.Direct-indexing and tax-loss-harvesting strategies do not eliminate investment risk or guarantee that losses will be available or sufficient to offset capital gains. Tax-loss harvesting may result in higher portfolio turnover, transaction costs, tracking error and tax consequences, including the application of wash-sale rules. Replacement securities may perform differently from the securities sold or the relevant benchmark.Tax-aware long/short strategies are sophisticated and may seek both pretax investment returns and tax benefits, but neither objective is assured. These strategies may involve short selling, leverage, derivatives, financing costs, higher turnover, greater volatility, tracking error, counterparty exposure, liquidity constraints, tax complexity and material losses.Short positions may result in losses exceeding the amount initially invested because the price of a security sold short may increase without limit. Leverage can magnify both gains and losses and may result in margin calls or forced sales at unfavorable prices. Long/short and leveraged strategies may not be suitable for all investors, and manager selection does not eliminate their risks.The tax consequences of selling, gifting, hedging, monetizing, contributing or otherwise transferring securities depend on an investor’s particular circumstances. References to tax management, tax mitigation, tax awareness, tax-loss harvesting or tax efficiency do not imply that taxes can be avoided or that any particular tax result, deduction, offset or level of tax savings is guaranteed. Tax laws and their interpretation may change.Clients subject to company trading policies, insider-trading policies, blackout periods, contractual restrictions or other limitations governing company shares are responsible for confirming whether a contemplated sale, gift, hedge, contribution or other transaction is permitted. Employment status, board affiliation, issuer policies, securities laws, contractual restrictions and the nature of the security may limit or prohibit a strategy. Morgan Stanley does not determine whether an issuer’s policies permit the scenarios discussed.The availability and suitability of the strategies discussed depend on factors including an investor’s financial circumstances, investment objectives, risk tolerance, liquidity needs, time horizon, tax status, employment or board affiliation, applicable securities laws, issuer trading policies, contractual restrictions and Morgan Stanley eligibility requirements. Not every strategy will be available or appropriate for every investor.Statements regarding potential income, downside mitigation, volatility reduction, diversification, risk reduction, tax-sensitive outcomes or narrowing the range of potential results describe objectives or possible effects only. No income level, protection, risk reduction, diversification benefit, tax outcome or investment result is guaranteed.Morgan Stanley Smith Barney LLC, its affiliates and Morgan Stanley Financial Advisors may receive compensation in connection with the products, services and strategies discussed. Such compensation may create an incentive to recommend certain products or services. Investors should review applicable offering materials and discuss fees, expenses and potential conflicts of interest with their Financial Advisor.Links to third-party websites and references to third-party materials are provided for convenience and informational purposes only. Morgan Stanley does not control and is not responsible for third-party content, policies or availability. Accessing a third-party website is at the user’s own risk.Not all products and services may be available to persons living outside the United States.Morgan Stanley Wealth Management is a business of Morgan Stanley Smith Barney LLC.©2026 Morgan Stanley Smith Barney LLC. Member SIPC.CRC 6076176 (11/2026)
