Market overhang


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Market overhang

The theory that, in certain situations, institutions wish to sell their shares but postpone the sale because large orders under current market conditions would drive down the share price and that the consequent threat of securities sales will tend to retard the rate of share price appreciation. Support for this theory is largely anecdotal.

Market Overhang

Shares in a security or commodity contracts that are likely to be sold in certain circumstances, creating downward pressure on the price. That is, the market overhang supply is a block that investors are holding but will likely attempt to sell. For example, if a security hits its resistance level, more investors are likely to sell their shares which increases the number of shares available on the market and, assuming demand does not increase, will lead to a decline in the price. Market overhang is also called the overhanging supply or simply the overhang.
References in periodicals archive ?
stated, "We were pleased to be able to purchase a significant block of restricted Omtool common stock, limiting the dilution to our shareholders resulting from the private placement that we recently announced and removing the market overhang of these shares.
The repurchase of these shares from Roger Marten's estate at an attractive price is an excellent opportunity to enhance value for our shareholders and to eliminate the market overhang created by these shares," said Randy Marten, president and chief operating officer of Marten Transport.
This transaction reduces the market overhang that resulted from the 79 million shares issued to Diageo plc as part of the Pillsbury transaction, ensures that Diageo plc will hold a specified amount of General Mills shares for three years, and offsets any potential dilution to General Mills shareholders.
Cam" Carruth, president and chief executive officer of TNT Freightways, commented: "Acquiring TNT Limited's entire block of stock at an attractive price is an excellent opportunity to enhance value for our remaining shareholders and to eliminate the market overhang represented by TNT Limited's shares.