# Sell or Hold - Company stocks



## bigmoneytalks (Oct 3, 2014)

Hey guys,

With the recent shakedown in tech stocks, I'm in a situation where I'm thinking of selling my entire company stock before things get worse (i.e. RSUs and options given to me by my employer). I am fortunate to have shares where I work and this past year, the stock was just stellar. However, I have already lost some money on a few shares that were recently vested due to the correction, but I think this might be a good time to just completely get out of it and lock in some gains. And from my research, you can carry forward losses to offset future gains so maybe I can use this strategy for those few recent shares that are in the red. 

With what's going on, would this be a wise decision or would you continue to hold on? I have also heard opinions from others that this could be a blip and the NASDAQ could continue to grow but with so much uncertainty and the risk of inflation, I'm not sure anymore. 

I'm also thinking of moving this money into more diversified investments to keep this money growing albeit much slowly

Looking for some thoughts or other ideas ...


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## MrMatt (Dec 21, 2011)

bigmoneytalks said:


> Hey guys,
> 
> With the recent shakedown in tech stocks, I'm in a situation where I'm thinking of selling my entire company stock before things get worse (i.e. RSUs and options given to me by my employer). I am fortunate to have shares where I work and this past year, the stock was just stellar. However, I have already lost some money on a few shares that were recently vested due to the correction, but I think this might be a good time to just completely get out of it and lock in some gains. And from my research, you can carry forward losses to offset future gains so maybe I can use this strategy for those few recent shares that are in the red.
> 
> ...


I would not hold much company stock at all, unless I was obligated to.
It is too much concentration.


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## cainvest (May 1, 2013)

A few questions might help clarify an answer.

Did the companies fundamentals or outlook change? (i.e. gone from good to bad)
Is their stock price currently way overvalued? (Possibly due to market hype alone?)

Also what MrMatt pointed to ... what percentage of your portfolio is in your company?


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## james4beach (Nov 15, 2012)

When I worked for a public tech company, I sold my RSUs as soon as I was allowed to. You already have such a huge stake (being employed!) that I think it's not wise to also have equity. It amplifies your overall exposure to the company. And I wouldn't care in the least whether the shares look high or low at the time.

In my case, the shares I sold went up in the following years, but I still think I made the right decision. Otherwise it's too much concentration as @MrMatt says.



bigmoneytalks said:


> I'm also thinking of moving this money into more diversified investments to keep this money growing albeit much slowly


I think this is a great idea. It's far better to liquidate company shares and invest into a diversified portfolio. You continue to have "upside" from your company anyway... your salary & bonuses.


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## bigmoneytalks (Oct 3, 2014)

cainvest said:


> A few questions might help clarify an answer.
> 
> Did the companies fundamentals or outlook change? (i.e. gone from good to bad)
> Is their stock price currently way overvalued? (Possibly due to market hype alone?)
> ...


Company is strong balance sheet wise and an growing market but like all tech stocks, it is overvalued and has double since the pandemic. One thing that has detered me is taxes. Every time I sell, I get a big tax bill and I was hoping to retain these shares and sell them during low income years but if I wait, I might also lose on these big gains.


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## Ponderling (Mar 1, 2013)

The company I work at has been through a few rounds of buy outs. First two were Canadian Controlled Private Corps. The present one is publically traded. 

In the CCPC's I as junior partner/ manager I was obligated to hold the stock to be entitled to profit bonus, and quite a bit of that went out as dividends. No RSU's . Not that it was a bad deal. On making junior partner I was obliged to buy $10K of stock; Three months later I was bonussed another $10K on the company's dime. I would reinvest all dividends. 

Then the first buy out took my by then $22K and made it 70K in the second company. I then put this in an RRSP; One broker would do it and it had to be him, but Co would pay annual fees. I would max my RRSP into the company stock as much as I could get shares each year. 

Then five years ago then next buy out took $188K in company 2 stock and it became $320K in the present public co.

Then I no longer had to hold shares, so I sold them. I took 20K of the cash and bought into a non reg synthetic DRIP plan that holds the public stock. I do $2k per year into this in payroll deductions , and the company in the following year will match it for $2K that they pay for. 

We are not a tech co, and our stock price mostly plods along ever so higher with each smaller co we gobble up. It currently yeilds about 3.5% divvy


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## james4beach (Nov 15, 2012)

bigmoneytalks said:


> One thing that has detered me is taxes. Every time I sell, I get a big tax bill and I was hoping to retain these shares and sell them during low income years but if I wait, I might also lose on these big gains.


I understand the tax hesitation, but remember: this is part of your compensation. Imagine if your regular salary was this amount (including the RSUs). It's very normal to pay taxes while you collect your salary or compesnation.

To me it seems like a pretty complicated and uncertain gambit, to hold off on selling the stock anticipating a better tax year, while you keep the exposure the whole time.

I think what @cainvest asked is important: what % of your "investment portfolio" the shares are, thinking of them like a portfolio holding. If you already have 200K of diversified investments and these RSUs are 10K, or 5% of your total, then really not a big deal and you can leave it as stock to try timing it for tax reasons. But if you're talking any significant % of your overall investments then I would forget about the tax headache, just accept it's part of your compensation and taxes must be paid as with any other salary.


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## cainvest (May 1, 2013)

james4beach said:


> If you already have 200K of diversified investments and these RSUs are 10K, or 5% of your total, then really not a big deal and you can leave it as stock to try timing it for tax reasons. But if you're talking any significant % of your overall investments then I would forget about the tax headache, just accept it's part of your compensation and taxes must be paid as with any other salary.


Pretty much what I was getting too. If the company stock is small $ and/or % it's really not a big deal for exposure, I've done it in the past. Selling off to optimize your taxes over a few years isn't a big deal then and you get to cash in on some of the hype.


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## ian (Jun 18, 2016)

I was an employee of a high tech firm. I purchased company stock through the firms stock purchase plan, was granted RSU's, and stock options. Not a fan of RSU's because of the tax implications. Stock options were great and prudent exercise of them allowed me to retire early and be financially secure.

I would caution anyone in your position not to drink too much of the kool-aid. My experience is that there are always people in the firm who will claim the stock is going higher and higher. This may well be so but my advice is to ask if you would make this investment if you were not an employee, and would you invest so much of your assets in one firm. I also saw a few colleagues make poor decisions based on tax implications. In one instance I know opportunity lost was in the high six figures, low seven figure.

Our financial adviser recommended I sell my remaining options in my former employer to lock in gains for retirement. I had already exercised a fair number prior to that time. The stock was trading at 52. I exercised the remaining options. Fellow employees predicted a $75 stock within a year. The stock went to 54/56. A year later it was down to $22 or so, my strike price on that last option grant. Again, I know of colleagues who had options and followed the stock down to below their strike price.

I would not recommend making decisions based on the tax implications of your actions. Look at it from a gain/loss perspective and do not let any company loyalties, ties, etc. cloud your judgement when it comes to your risk assessment threshold or your personal financial situation.


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## bigmoneytalks (Oct 3, 2014)

Thanks all!! This is such a great forum! 

Yes my exposure is about 25%. I sold some today and now have 10% exposure. I've accepted the tax concequences and will max my RRSPs this year to help reduce the final tax bill


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