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What do you do with company stock?

3,702 Views | 26 Replies | Last: 7 yr ago by 94chem
aTm2004
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AG
I put 5% of each check toward purchasing company stock each quarter at the standard 15% discounted rate. As of now, I'm sitting around 48% gain on what I've purchased so far due to a few great quarters by us recently. The total value that I have is beginning to get pretty substantial, and I'm wondering if I should sell some of it to take my gains and max out both the of my wife and I's Roths. I think I have until April to fully fund for 2016, so if I do this, I may use this as a means for funding the Roths in the future. Not sure if it matters, but the company does pay dividends.
FHUAggie
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My wife and I have been aggressively paying down remaining school loan debt, so we've used a portion of ours to move forward on that path. Should be 100% debt free by the middle of next year!

After that, I'm thinking we'll likely do something similar as you're describing with divvying some into some form of an IRA, leaving some in the market, and maybe even cashing out and investing some into real estate assets if we come across any solid deals.
Clavell
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Personally wouldn't have more than 5% (10% tops) of investment in any one stock so I would divest some. Especially true if work for the company, you are already very tied to their success or failure. Think ENRON.
Thriller
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We keep the 401k match that comes in company stock. We sell our RSUs pretty much right away to avoid having too much in one basket. We can then either reinvest in our decided asset allocation strategy or use it for house, tuition, etc.
jakelew04
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I sell as soon as I am able. My dad was burned big time by Enron. I've sworn I won't let the same thing happen to me.
mforce
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I sell as soon as I get the shares. If you can afford it, there is no reason not to max out employee purchase program. Ours is capped at 10%.
aTm2004
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I'll probably end up selling it as this is the recommendation from my FA. I sent her the information she requested a while ago. I would love to max the purchase program out, with all of the other savings/investing we do coupled with my wife being a SAHM right now, it's not in the cards.

Thanks for the advice.
aggiebq03+
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I don't buy individual stocks, and the only reason I purchase my company stock in the ESPP plan is a guaranteed 15% discount and the possibility of an even better discount at purchase. But I always sell right away. Always sell any other shares as well. I figure if I wouldn't use my cash to buy the company stock at market value, why keep the stock instead of selling. I'd always rather have the cash for something else than stock in my company.
SparkE
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Has anyone sold covered calls to buy protective puts on lots of highly appreciated stock? I know you have to keep the strike prices apart to keep the IRS happy but this would finance downside protection and avoid taxes unless the stock took off.
CapCity12thMan
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what do you do if your company stock is this:

I can't see immediate selling this with each acquisition of ESPP stock, however I do agree with the diversification mindset. I think some sort of tiered scaling down of the holding is appropriate here...other thoughts?
jakelew04
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What does a graph of Enron stock look like prior to 2000/2001?

If you work for a public company and want to get long their stock you can do that anytime you want. The value of your company awarding you stock or letting you buy it at a discount is independent of what happens to the share price after you vest. Everything after that date is an investment decision you make.

In my opinion I would not overweight a stock because I work for the company. I would do the opposite. I am already overweighted because they pay my bills.

Maybe I'd change my tune a little if I was CEO one day.
aTm2004
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That's similar to my company's stock chart over the past 5 years.
CapCity12thMan
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I am not over weighting the stock because I work there (because I don't). I see it as a good investment because of the numbers, their performance and the returns.
aggiebq03+
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CapCity12thMan said:

I am not over weighting the stock because I work there (because I don't). I see it as a good investment because of the numbers, their performance and the returns.

The point is many people at working at failed companies have thought this in the past. As an employee you don't really have any idea if someone is cooking the books, or if a lawsuit is about to happen because someone who works for the company if Africa was bribing people, etc.

As stated Enron is the poster child for this, but they are far from the only example.
CapCity12thMan
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I completely agree, just stating how hard it is to walk away from something performing like it is, getting an already 15% discount. Correct me if I am wrong but the Enron fiasco was largely retirement money and retirement money for people really close to retirement. THAT is the worst of the worst. I don't recall specifically, but was Enron volatile the years prior? I think loading up on stock that is more volatile is riskier. The graph I posted is pretty darn stable.

I have 0 retirement money in this company stock, so to me my risk tolerance is different with it, but again - totally agree on the Enron bogey.

I'd like to better understand strategies of calls and puts for this stock to maximize even more if possible. Seems to have such a predictable track record going back 15 years.
Wyoming Aggie
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I wouldn't ever put a sizable portion of my income into one company in the way of stock. I don't know how management is running things. Like someone said about Enron, if you have some shady folks, you lose every penny of that nest egg.
ORAggieFan
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I always ask people "if you were gifted $xxxxxx would you buy the company stock with it?"

If the answer is no, sell. I always sell. Having 50% of the year in black out, bonuses and other stuff tied to the results I take my profit when I can.
sniperag
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Sell what u don't want to potentially lose and diversify. I bought a bunch of my company stock and then the oil downturn happened. It is worth fraction of what I bought in at. And of course now there is the potential of being Laid off.
SparkE
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If you guys start to get into the 7-figure range with company stock (hey, it happens) swap funds may be worth a look. You know, for the texags millionaires out there
colonialag
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I contribute up to the maximum 10% and sell as soon as the shares are transferred to my personal brokerage account. Personal decision to minimize exposure to the company that signs my paycheck until I am in a position to start making decisions that really matter.
EliteZags
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would the size/reputation of the company affect your philosophy or at least urgency to sell the stock? as in large stable company vs smaller volatile

I'm with Medtronic (largest med device company in the world) have been maxing the 10% purchase at 15% discount but only for 2 years so not a huge position yet, single with no house/kids so able to do that while also maxing Roth/401K/HSA, but haven't really looked into how soon I'm able to sell after purchase, my default taxable investing usually goes to Vanguard Total Stock Market Index
jpd301
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jakelew04 said:

What does a graph of Enron stock look like prior to 2000/2001?
aggie028
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Why would you do any kind of savings ahead of the 15% guarabtee? Unless you are referring to 401k up to company match, I'm not sure that makes sense.
HC
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SparkE said:

If you guys start to get into the 7-figure range with company stock (hey, it happens) swap funds may be worth a look. You know, for the texags millionaires out there
thanks for the suggestion. I'll look into it
aTm2004
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aggie028 said:

Why would you do any kind of savings ahead of the 15% guarabtee? Unless you are referring to 401k up to company match, I'm not sure that makes sense.
Mainly because a large majority of the other savings we do right now since my wife at home with the kids is taking care of the stuff needed for the house since we don't escrow (taxes, house/car insurance, HOA, general/future maintenance, etc). Doing what you're stating is probably a smarter way to save for this, but my personality doesn't allow it. I could not get comfortable buying company stock (even with a 15% instant return) when there is a due date on a large bill at the end of the year that I'm not contributing to. We're also working on paying off our house early. Again, probably not the wisest financial decision, but our personalities allow us to justify the potential loss of earnings as the cost of having peace of mind. We also add money to our Roths each month, but it looks like that may come to an end and we'll use this as a way to fund them in the future. This is my first job at a public company. so having a stock purchase program is new to us. Once my wife is back at work, I'll look at possibly increasing the amount.
insanediego
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Remember - pigs get fat and hogs get slaughtered
Quinn
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EliteZags said:

would the size/reputation of the company affect your philosophy or at least urgency to sell the stock? as in large stable company vs smaller volatile

I'm with Medtronic (largest med device company in the world) have been maxing the 10% purchase at 15% discount but only for 2 years so not a huge position yet, single with no house/kids so able to do that while also maxing Roth/401K/HSA, but haven't really looked into how soon I'm able to sell after purchase, my default taxable investing usually goes to Vanguard Total Stock Market Index
Any chance you can hook a fellow Ag up with a MiniMed 670G?
94chem
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Quote:

what do you do if your company stock is this:
What does that top x-axis on the graph mean?
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