Reducing the risk of a concentrated single stock position without outright sale

Situation

Zuri is a newly retired accountant. Over the course of several years during her tenure, she invested portions of her paycheck in a startup company. This company recently had an initial public offering and most of Zuri’s wealth came out of lockup. While Zuri was materially wealthy on paper via her investments in the company, she did not have a lot of liquidity on her balance sheet and was therefore looking for ways to diversify risk and create liquidity for a nicer lifestyle.

Our Approach

Zuri’s J.P. Morgan team reached out to the Strategic Equity Solutions team to better understand single stock diversification strategies. The Strategic Equity Solutions team suggested that Zuri extract liquidity from her stock through secured borrowing, essentially a line of credit. This approach would allow her to access her wealth while still retaining ownership of her shares.

Outcome

By following the suggestions of the Strategic Equity Solutions team, Zuri was able to balance her liquidity needs while still staying invested in the company. She was also able to secure her wealth against market movements and start her wealth journey. Her J.P. Morgan team began discussing ways for Zuri to bucket her wealth, taking into account tax implications.

Important Information

All case studies are shown for illustrative purposes only and should not be relied upon as advice or interpreted as a recommendation. They are based on current market conditions that constitute our judgment and are subject to change. Results shown are not meant to be representative of actual results or experience of other individuals. Past performance is no guarantee of future results.

Loans and lines of credit are extended at the discretion of J.P. Morgan, and J.P. Morgan has no commitment to either extend any loan or line of credit, or make loans available under a line of credit. Any extension of credit is subject to credit approval by J.P. Morgan and, if approved, the terms contained in the definitive loan documents. Loans collateralized by securities involve certain risks and may not be suitable for all borrowers and investors. A decline in the value of securities pledged as collateral may require the borrower to provide additional collateral and/or pay down the loan or line of credit in order to avoid the forced sale of the securities by the lender. Please read your loan documents carefully so that you understand your obligations.