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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 ?
These utilities are of varying sophistication, ranging from simply listing or reporting the dead links to giving detailed reports on incidence rate, with types of errors or problems.
Just as important as the search engine's size is its freshness, or how often the spider crawls across the web to find new sites and eliminate dead links. For example, AltaVista, Excite, and HotBot all crawl regularly, covering a substantial number of pages.
The common perception is that the Web is a fragile creature filled with dead links, "404 Not Found" error messages, hasty e-mails and other transient digital debris.
So now your website is free of dead links, and information is easier to find.
It's inexcusable when a site is riddled with internal dead links.
As a result, their users can efficiently sift through social networks without getting stuck in clutter, dead links, and signup pages.
The library landscape is littered with abandoned podcast sites, archives that haven't been updated since 2008, and dead links where audio files used to be.
Goodbye to unnoticed dead links, fiddling with link checkers, FTPing updated Web pages to the server, and trying to remember to work on that darned so-and-so page.
Pyerse Dandridge, founder of MyBlackNews.net, reported: "The problem with the toolbar is that it caused a lot of dead links. So we removed this feature in favor of simpler format.