Stub

Definition of 'Stub'


The balance part of a check or receipt that is retained for record-keeping purposes or as proof of payment. In the context of securities, a stub refers to a residual security that is left over after being separated from the parent security. The term may also refer to a stock formed from the conversion of a company's bonds under distressed conditions, such as a bankruptcy or recapitalization.

Investopedia explains 'Stub'


As residual securities, stubs are not viewed as very desirable instruments, since the parent security may retain most of the attractive attributes of the original investment.

Stub stocks derive their name from their low price, which is usually a fraction of the value of the bonds from which they have been converted. The low stock price reflects the uncertainty surrounding the recapitalized company, and makes stub stocks a highly speculative investment with the potential for significant positive returns if the company is successful in making a turnaround.



comments powered by Disqus
Hot Definitions
  1. Degree Of Financial Leverage - DFL

    A ratio that measures the sensitivity of a company’s earnings per share (EPS) to fluctuations in its operating income, as a result of changes in its capital structure. Degree of Financial Leverage (DFL) measures the percentage change in EPS for a unit change in earnings before interest and taxes (EBIT).
  2. Jeff Bezos

    Self-made billionaire Jeff Bezos is famous for founding online retail giant Amazon.com.
  3. Re-fracking

    Re-fracking is the practice of returning to older wells that had been fracked in the recent past to capitalize on newer, more effective extraction technology. Re-fracking can be effective on especially tight oil deposits – where the shale products low yields – to extend their productivity.
  4. TIMP (acronym)

    'TIMP' is an acronym that stands for 'Turkey, Indonesia, Mexico and Philippines.' Similar to BRIC (Brazil, Russia, India and China), the acronym was coined by and investor/economist to group fast-growing emerging market economies in similar states of economic development.
  5. Pension Risk Transfer

    When a defined benefit pension provider offloads some or all of the plan’s risk – e.g.: retirement payment liabilities to former employee beneficiaries. The plan sponsor can do this by offering vested plan participants a lump-sum payment to voluntarily leave the plan, or by negotiating with an insurance company to take on the responsibility for paying benefits.
  6. XW

    A symbol used to signify that a security is trading ex-warrant. XW is one of many alphabetic qualifiers that act as a shorthand to tell investors key information about a specific security in a stock quote. These qualifiers should not be confused with ticker symbols, some of which, like qualifiers, are just one or two letters.
Trading Center