# Cache Long/Short: A Client Case Study, Two Months In

I was the first investor in Cache Long/Short. When we launch something new at Cache, it rolls into production on my account. Long/Short was no exception. Here's the experience so far, with my real numbers.

[Srikanth Narayan](/content/author/srikanth-narayan/index.html)

Founder and CEO

### The Setup

In late March, I funded my account with roughly $1M of assets: a portion of my concentrated UBER position, a highly appreciated GLD position, and several ETFs and cash as collateral.

I worked at Uber from 2014 to 2020. My earliest Uber grants from stock options were highly appreciated, and I used the [Cache Exchange Fund](/content/product/exchange-funds/index.html) to diversify some of these holdings. Ongoing grants, issued as RSUs, had a higher cost basis, making them well-suited for [Cache Long/Short](/content/product/long-short/index.html).

That distinction matters. We often hear investors talk about concentrated stock as though it were a single position. In practice, different lots can have very different tax characteristics. The right strategy for deeply appreciated options may not be the right strategy for ones with higher basis.

### My Cache Long/Short Portfolio

About two months in, the portfolio held roughly $1.2M across 837 positions, running a 130/30 long/short strategy benchmarked to the S&P 500.

More information on long and short exposure in the long short leverage disclosure at the end of the article.

### Tax-efficient Diversification

The Uber position is largely gone: down from 6,647 shares ($465K) to 318 shares ($22.6K), a 95% reduction across 20 separate trades. Those trades realized about $200K in gains. The purpose of the strategy was to generate losses elsewhere in the portfolio that could offset those gains.

Across 854 transactions, the strategy harvested $78.7K in losses. Nearly all of the gains realized from selling UBER and GLD were long-term, while nearly all harvested losses were short-term. That's generally the most valuable tax outcome.

### The Benefits

Taxable long-term gains fall from roughly $195K to $125K in just two months, and **as of this writing the strategy still had several months left in the year to continue harvesting**.

Given my legacy holdings, performance is compared against an adjusted benchmark that factors in these weights. Since we started, the strategy is up 12.6%, slightly ahead of the adjusted benchmark on an after-tax basis. The tax-loss harvesting didn't require stepping out of the market.

_Expenses include a 0.50% annual management fee and average borrowing costs of 0.29% per year (borrowing costs are variable), for total annual fees of approximately 0.79%. Investors are also subject to custodial and other fees, as described in Cache Advisors LLC's Form ADV._

Over the first two months, the strategy generated roughly $40K of losses per month. Future loss generation will depend on market conditions, and a substantial portion of the remaining taxable gain from the UBER unwind ideally may be offset before year-end.

One common misconception is that tax-loss harvesting eliminates taxes altogether.

It does not.

The gain is simply deferred rather than eliminated. My portfolio began with roughly $411K of embedded gains. After realizing gains, harvesting losses, and remaining invested, the portfolio still contains roughly $429K of embedded gains. The value comes from when and how those gains are recognized.

Over two months, roughly $500K of concentrated UBER and GLD exposure moved into a broadly diversified portfolio, while the strategy harvested meaningful losses along the way.

Running the strategy in my own account reinforced something we've long believed: concentrated stock is rarely a single problem with a single solution. In my planning, my earliest Uber grants were better candidates for an Exchange Fund. Later RSU grants proved well-suited for Long/Short.

Different lots call for different tools.

If you're weighing how to manage a concentrated position, you can model your own situation with our [Long/Short calculator](/content/calculators/concentrated-stock-diversification-calculator/index.html), learn more on the [Long/Short product page](/content/product/long-short/index.html), walk through the [live dashboard of a demo account](/content/dashboard/long-short/demo/index.html), or [talk to our team](https://calendly.com/d/cq2d-38w-k8z/cache-investor-questions).