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by gvb
2522 days ago
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They should follow Marc Cuban's example; take some money out of their share holding and diversify their investments. Quoting from https://www.fool.com/slideshow/7-things-you-can-learn-mark-c... 5. Diversification is extremely important It’s important to maintain a diverse investment portfolio, whether you’ve just come into billions of dollars as Mark Cuban did in 1999 or you’re starting with a few hundred dollars. When Cuban and his partners sold Broadcast.com in 1999, they didn’t get billions in cash -- it was all in the form of Yahoo stock. Instead of holding virtually all of his wealth in one company’s stock, he did a great job of diversifying his investments. Cuban spent $20 million hedging his Yahoo stock with synthetic indexes, and shortly thereafter acquired assets such as the Dallas Mavericks and Landmark Theatres. It’s a good thing Cuban did all of that. Yahoo’s stock price dropped by more than 96% from January 2000 through September 2011. To put this in perspective, $1 billion in Yahoo stock would have fallen in value to just over $34 million. |
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My understanding is that he used puts.
Either way, any derivative strategies he employed back then almost certainly violates any corporate stock agreement today.