Stock overhang

Stock overhang is a phrase used to describe a sizeable block of shares which, if it were to be released in the market in one go, would flood it, and so depress prices.

Stock overhang is a phrase used to describe a sizeable block of shares (or, for that matter, of securities, commodities, contracts, and so on) which, if it were to be released in the market in one go, would flood it, and so put downward pressure on prices.

For example, if an institutional investor is known to be trying to offload a large holding, it is said to be overhanging the market. This will tend to depress the share price of the company concerned until all the stock has been sold.

Other examples might be shares held in a dealer's inventory or a large commodity position about to be liquidated. If you become aware of the overhang early enough, your best bet might be to sell.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up