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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 ?
The Copyright Company has been looking for opportunities to help and we guided them towards the orphanage as they can use any support they can get.
Zia, who was prime minister between 1991 and 1996, set up a fund by the name of Prime Minister's Orphanage Fund.
Earlier the coordinator of the Treasure Orphanage, Federal Housing Karu, Mrs Sarah John had pleaded with the Speaker to assist in getting a permanent for the home and prayed to God to continue to guide and guard him in the journey of life
Several orphanages were closed in Egypt over the past few months after reported torture and abuse cases surfaced.
The details, he said, should also include male and female inmates in the orphanages, number of buildings owned by the social welfare department, number of buildings on rent and sanctioned strength and deficiency of the staff that required to be filled up.
The couple operated an orphanage in a two-story house in Barangay Bool in this city that was raided by NBI agents on Oct.
The Juvenile Justice (Care and Protection of Children) Act, 2015, makes it mandatory for all orphanages and children's homes to be registered under it, even if they have licence via any other law.
If the psychological atmosphere of the Orphanage could be merciless, the physical plant itself, the meals and the clothing were all more than adequate.
She pointed out that the orphanage is funded by the Ministry of Awqaf (Religious Endowments).
Anne Black, archivist with the charity, said: "The orphanage was their home and family and when they heard one of their number died in the war there was a real sadness.