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Orphan Stock

A stock that is not often tracked by analysts. This may be because it is not very well known or because it belongs to an industry that is generally performing poorly. As a result these stocks have low demand and often a low price. Some value investors recommend buying orphan stocks because they could be undervalued. However, because demand is low, orphan stocks have low trading volume and a small change in demand may result in volatility in price. An orphan stock is also called a wallflower.

orphan

Of or relating to a security that is not regularly covered by security analysts. An orphan security is likely to attract little investor interest and to sell at a relatively low price compared with other securities of the same type. For example, an orphan stock is likely to sell at a low price-earnings ratio and an orphan bond will offer a relatively high yield.
Case Study Many individuals in the financial community believe investment banking firms have an obligation to provide continuing research coverage of companies they take public. Research coverage increases a firm's exposure to the investment community, an important benefit for the firm and its shareholders, especially investors who acquired stock during the initial public offering. Dropping coverage of a small company and causing the stock to become an orphan can have a devastating effect on the stock's liquidity and market price. In some instances coverage is discontinued because of a loss of investor interest, in which case any remaining investor interest can virtually disappear. Orphan stocks became more common in the tech stock meltdown of 2000-01. In October 2001 Credit Suisse First Boston dropped coverage of Evolve Software, a software and fiber optics company that CSFB took public for $9 a share in August 2000. Although the stock quickly tripled in price following the initial public offering, it soon got caught in the downdraft of the bear market for technology stocks and had declined to approximately 25¢ per share by the time CSFB dropped its coverage of the firm. The analyst at Credit Suisse First Boston remained bullish on the stock until coverage was suddenly dropped a little more than a year after his firm managed the initial public offering.
References in periodicals archive ?
Donators should ask about the orphanage's board of directors and make sure the orphanage is registered under the Ministry of Social Solidarity.
She pointed out that the orphanage is funded by the Ministry of Awqaf (Religious Endowments).
In one letter, written by In one letter, written by Bombardier George Paines who arrived at Aberlour with two sisters in 1901, he thanked the orphanage for a tin of cocoa sent at Christmas.
Brook, volunteering at an orphanage with a school friend, became seriously ill with stomach complications and fell unconscious.
The Christian Brothers closed the orphanage in June 1990.
Most of the children housed in the orphanage are conflictaffected;
The children are now being returned to the Los Ojos de Dios orphanage, and officials at the facility are using the experience to teach similar charities about the challenges of operating in Mexico.
There are even ' professional agents' to recruit children from poorer states for the " orphanage industry".
The orphanage, established in 1992, has three buildings for different age groups--6-8, 9-14, and 15 and older.
The orphanage is part of an effort to save children orphaned by the country's 1993-2005 civil war from a life in makeshift shelters and miserable conditions.
The Sikh Union Ladies charity in Coventry has chosen the Asha Sadan orphanage, in Delhi as their international project which they launched at The House of Commons in June.