Managing a Concentrated Portfolio - How do you do it?

[Cor]

Hi Gents,

I would greatly appreciate some advise on helping me manage a non-diversified portfolio from the experienced folks here. I am fairly new to investing and have a 30ish year investment horizon for context.

Not by choice, but I ended up with a >50% portfolio allocation in a single SaaS stock (large cap). It lagged the S&P over past couple of years and is taking quite the beating this year along with the entire sector. My general comfort level around a single stock is a 1-2% allocation, and I think I've seen people recommend up to 10% or so typically? 

My general strategy is holding everything long-term and I'm mostly in indices outside of this one position - and some very small "learning" positions in individual names. However, it's discouraging trying to track annualized returns with this one stock weighing everything down so heavily. Part of me thinks I should have sold and moved the funds to an index some time ago, and part of me doesn't want to take the loss and just hold for years to come. 

Stock investing seems hard from a mental point of view and I'm still learning on how to manage my emotions. The recent SaaS dump is tipping the scales a little and I'm just looking for some guidance from brighter minds. Thanks guys. 

 

[SharperDingaan]

Most would sidebar this large and restricted position into it's own portfolio; both for the tax possibilities, and to avoid distorting the 'core' portfolio. Thereafter, everything in the 'core' portfolio invested in anything but SaaS.

 

What you do with that SaaS position, will very much depend on your expertise and experience in the sector. Long term sell or hold dependent on where you think the tech could go, a decision best made when you also have industry expertise. Risk tolerance thing.

 

Good luck.

 

SD 

 

 

 

Edited Saturday at 02:47 PM by SharperDingaan

[73 Reds]

57 minutes ago, SharperDingaan said:

Most would sidebar this large and restricted position into it's own portfolio; both for the tax possibilities, and to avoid distorting the 'core' portfolio. Thereafter, everything in the 'core' portfolio invested in anything but SaaS.

 

Thereafter what you do with that SaaS position, will very much depend on your expertise and experience in the sector. Long term sell or hold dependent on where you think the tech could go, a decision best made when you also have industry expertise. Risk tolerance thing.

 

Good luck.

 

SD 

 

 

 

+1.  Side note:  Any allocation decision with regard to the single stock should be made when you want to, not when you have to.

[Paarslaars]

I mainly do this by praying a lot and crying every now and then...

[Longnose]

I cry on the inside. But know the numbers and story of the company up and down.  Then I remind myself that markets are irrational and in no world would the company be taken private for the current valuation/marketcap. Then i go to sleep with a hope and prayer that the market will recognize how dumb the valuation is tomorrow. 

 

Usually I don't take these positions unless i have really strong conviction. but I am dumb enough to put 75-80% of my eggs in one basket on more than one occasion. 

 

Conviction is probably the biggest piece for me. Doesn't make it more enjoyable but it make holding easier. 

[Cor]

Thanks guys. Sounds like Paarslaars and Longnose just hold through the pain believing their conviction will be rewarded at some point? I do believe the stock I’m holding is an industry leader and quite profitable. I have no reason to doubt that leadership will not hit their revenue goals in the stated timeline and analyst estimates for when they do are so much higher than price today. 
 

Sigh. I guess I’ll start praying too. 

[thepupil]

On 6/12/2026 at 10:53 AM, Cor said:

Hi Gents,

I would greatly appreciate some advise on helping me manage a non-diversified portfolio from the experienced folks here. I am fairly new to investing and have a 30ish year investment horizon for context.

Not by choice, but I ended up with a >50% portfolio allocation in a single SaaS stock (large cap). It lagged the S&P over past couple of years and is taking quite the beating this year along with the entire sector. My general comfort level around a single stock is a 1-2% allocation, and I think I've seen people recommend up to 10% or so typically? 

My general strategy is holding everything long-term and I'm mostly in indices outside of this one position - and some very small "learning" positions in individual names. However, it's discouraging trying to track annualized returns with this one stock weighing everything down so heavily. Part of me thinks I should have sold and moved the funds to an index some time ago, and part of me doesn't want to take the loss and just hold for years to come. 

Stock investing seems hard from a mental point of view and I'm still learning on how to manage my emotions. The recent SaaS dump is tipping the scales a little and I'm just looking for some guidance from brighter minds. Thanks guys. 

 

 

what are the consequences of selling? 

what's your basis as a % of market value

does it have a listed options market? 

are you a candidate for the numerous wealth mgt solutions for this? 

how many years of savings does it represent? Are we walking like "I have $20K of SaaSco and save $50K / year" or "I have $2 million of SaaSco and save $50k / year?"

 

Why hold it?

 

if you're not comfortable with a >50% position, then why have it? 

 

 

 

[Longnose]

To add when it comes to heavy concentrated positions I only see 2 real reasons to be this concentrated.

1. Your chasing extreme returns. 
2. You have extreme conviction in the company. 

Maybe you should ask yourself questions around why am I so concentrated in "SaaSco"  

 

I usually wont go super deep into a company unless I have extreme conviction in my analysis. It still hurts to be early. But i often feel like I'm having this conversation with my devils advocate in my head.  I often feel like burry where i cite the numbers and I'm like the numbers don't make sense the market must be wrong. so i just keep holding. 

 

The volatility doesn't bother me. But i do read and seek lots of material for my opposite hypothesis. I don't want to be blinded by bullishness to where I hold into the ground. I have abandoned a few concentrated in the past after admitting to myself that my analysis was wrong. 

 

[Malmqky]

What's the company?

 

Something like Berkshire, Fairfax, or even CSU is easier to concentrate in due to the diversified nature of the companies.

 

Something like Warrior Met Coal is tougher to concentrate in for obvious reasons.

 

You need to get a few drawdowns of 50% under your belt before you really can feel comfortable concentrating. Otherwise it's gonna be tough for you.

[Intelligent_Investor]

Don't own anything in a concentrated portfolio you wouldn't be comfortable owning if the market is closed for a decade. 2% position is pointless for individual positions, at that point just buy index funds.