This is educational content, not investment, tax, or legal advice. It is not a recommendation to buy or sell any security. Hire an adviser for personalized guidance.
At Basis Northwest 2026, Savina Rizova, Dimensional’s co-CIO, told a story about something strange her team had noticed in an equity portfolio they’d onboarded.
A stock in the portfolio was about to be acquired in a very public, all-cash transaction, but the previous manager had continued buying the name.
A manager might continue adding to a stock position if they were trying to minimize deviation from a benchmark, usually measured by something like tracking error.
But there are pre- and post-tax consequences to holding a stock being acquired, particularly if there’s a high probability the deal will close.
It’s generally sub-optimal for several reasons: