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Portfolio percentage in my company's stock
Old 10-28-2014, 09:30 PM   #1
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Portfolio percentage in my company's stock

I work for a company that's owned by the Danaher corporation (DHR). My portfolio is 17% DHR stock.

I know it's generally not wise to go overboard with company stock, but sort of think that may not apply here. Danaher owns and operates dozens of companies in the environmental, test and measurement, dental, life sciences and diagnostics, and industrial technology sectors, so it's sort of a mini-index fund in itself. It's ranked #149 on the Fortune 500 and, during the past 20 years, the stock has outperformed the S&P 500 Index by nearly 2,800 percent.

Some of my coworkers have upwards of 30% of their portfolio in DHR. These are level-headed types –engineers, accountants, and such. I'm thinking of raising my percentage up to at least 25%. Any thoughts on this?

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Old 10-28-2014, 10:02 PM   #2
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I say 5% max.

Originally Posted by O2Bfree View Post
it's sort of a mini-index fund in itself

Originally Posted by O2Bfree View Post
It's ranked #149 on the Fortune 500
Enron was #7.

And if I claim to be a wise man, it surely means that I don't know.
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Old 10-28-2014, 10:17 PM   #3
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I worked for a bank that went under back in the 80s... it had performed well until the State of Texas had their S&L crisis...

Some of the 'smart' people you mention had up to 100% in company stock... yep, they lost everything...

IF the stock is so great... then you need to re-balance with all that gain it produces...

For me, I think 10% is the highest I would want to go...
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Old 10-29-2014, 12:09 AM   #4
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It depends. In my case, I ER'd with > 60% of my NW in company options. I sold a bunch, but my FMC (former mega-corp) share price took a dive. If I'd sold them all at the top, I'd have netted about $7M. I got greedy and sold a %age every so often. Netted only about $4M. After my first sale, my ER was assured as long as I didn't want premium cat food. I can still afford hamburger once a week. YMMV.

In other words, look at what risk you are willing to take and decide from there. In my case I think I did great, many co-workers were in my position and sold their options for 10% of what I got to reduce "risk".

It's your problem and whatever you do will likely be "wrong" in hindsight. So, look to he future and decide what possible scenarios you can live with, than pick one.
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Old 10-29-2014, 05:50 AM   #5
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I think 5-10% would be ideal. It is foolish to think that any company is a special situation so one can be more concentrated.

Many employees at Enron, WorldCom and others could have written the same thing at points in time.
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Old 10-29-2014, 06:33 AM   #6
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Originally Posted by Onward View Post
I say 5% max.


Enron was #7.
Fantastic post, Onward. I nominate it for the "Most content per character-Award" - two opinions and a great counter-example, all within 8 words and 25 characters.

+1 on all accounts.

I would be willing to go a little over 5% only if the company provided me a significant incentive to do so - say, an employee stock program that allows purchases at a big discount. Still, I would try to sell as early as possible once the holding period is over.
I am willing to perform services in exchange for currency. For now.
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Old 10-29-2014, 06:42 AM   #7
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While this specific company seems at first glance to be a solid one with good growth prospects and not insanely overvalued, I'd apply the same principle here as you would with any other company: avoid concentration unless you are 100% sure you know what you are doing.

Also don't forget you are doubly concentrated: your income comes from this company too. In other words, if the company tanks, not only will you lose wealth but also have a decent chance of losing your job, both to no fault of your own (unless you are member of the board).

Whether or not this high concentration risk suits your appetite is up to you, but I'd be very wary.

Now, if you get stock options or similar at a discount, by all means take advantage of it. Seems safe enough (again, at first glance).

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