I talked to a father/son duo a month ago that had $8m in SNDK

The father told me he'd been in this situation before where he'd made a fortune from concentrated stock positions during prior run-ups...

but never diversified and lost it all.

This time, he wanted it to be different.

He wanted to diversify and to do it tax-efficiently.

Great! I said. That's exactly what I do.

My recommendation was straightforward:

• Collar the position to protect against a significant decline.
• Use a box spread to create liquidity (aka a synthetic variable prepaid forward).
• Diversify the proceeds into a portfolio that would have a much better chance of preserving + growing that $8m

That could include:

• Direct indexing or tax-aware long/short
• Fixed income
• Real estate
• Hedge funds
• Private equity
• Infrastructure

It’s pretty nifty because you can use the capital losses from the box spread loan and the tax-loss harvesting to sell down the concentrated position tax-efficiently over time.

But no.

Despite being impressed by my knowledge, the son said the AUM fee was too steep and they didn’t hire me.

Since then, the stock has declined dramatically, reducing the value of the position by roughly $4 million.

I’m sure the son thought he was protecting his dad from “losing money” to an advisor.

In reality, my entire job is to create value in excess of what I charge.

In this case, the cost of avoiding the fee was many multiples of what the fee would have been.