Companies that are emerging from bankruptcy are, similarly to spinoffs, subjected to indiscriminate selling pressure. Holders of the bankrupt company's debt usually are paid with newly issued stock or bonds of the company emerging from bankruptcy. These debt holders are not interested in receiving securities, they want cash. So, what do they do when they receive the company's stock? They immediately sell the newly issued securities. Similarly to spinoffs, this creates a lot of selling pressure on the stock, and drives the price down.
But, in this area of investing, it's extremely important to remember to PICK YOUR SPOTS. Not all companies emerging from bankruptcy make good investments. In fact, some of them make lousy investments. Some companies go in bankruptcy because they are simply bad businesses. You should avoid these. Some companies go into bankruptcy because of temporary reasons, such as excessive leverage, protection from lawsuits, etc. In the bankruptcy world, it's best to stick to companies emerging from bankruptcy that have strong market positions, a good business, and were in bankruptcy because of short-term reasons.
Evidence that stocks emerging from bankruptcy outperform the market:
There was a study released in 1996 which found that stocks of companies emerging from bankruptcy significantly outperformed the market averages. For the period from 1980 to 1993, stocks of companies emerging from bankruptcy outperformed the market averages by over 20% during their first 200 days of trading. Much of the outperformance came from stocks with the lowest market values.
It's a bit difficult to find information on bankrupt companies over the internet but I found some companies that have emerged from bankruptcy in the past few years and here's what I got:
As you can see, it's extremely important to PICK YOUR SPOTS. One of the companies (SPMD -- Supermedia Inc) is in a dying business (yellow pages directory publishing) and consequently, performed terribly.