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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 ?
Van Leeuwen and his co-authors Innocent Mulenga and Diana Lisensky compared the play behaviour of 8 orphaned and 9 mother-reared juvenile chimpanzees at the Chimfunshi Wildlife Orphanage Trust in Zambia.
The percentage of children orphaned by AIDS was much lower at 1.8 million (2.8%), but the populations in many Asian countries are so large that even if AIDS prevalence remains low, the number of people with HIV/AIDS threatens to surpass that of the most severely affected African countries.
Basia Gittel's Obsession With Clothes leads her to wrongly punish her orphaned relative.
He said the federal government was committed for the welfare of orphaned and poor children of the tribal areas and all possible means are being used for the purpose.
The history of a system instituted by the Children's Aid Society of New York that placed more than 200,000 orphaned or abandoned children on farms in America's heartland between 1853 and 1929.
Next, we briefly describe the historical situation of the orphaned child in the Netherlands, and sketch the socioeconomic situation of our research area.
Into this fray stepped Cardinal Basil Hume, who demanded the orphaned embryos either be adopted or reverently buried.
The report titled "The state of orphans in Jammu and Kashmir" says that the study conducted in six districts of the territory reveals that 37 per cent of the orphans lost one or both parents due to the Indian troops while 55 per cent were orphaned due to the natural death of parents and remaining eight percent due to other reasons.
On the occasion, the orphaned students presented their wonderful arts, recited poems and delivered words expressing the suffering of orphans in life as well as hope for better life with the support of philanthropists.
Qatar Charity (QC) has held an educational camp and a recreational trip for Burkina Faso orphans as well as a ceremony to honour outstanding orphaned students for 2016.
ISLAMABAD -- A study carried out by UK-based child rights organization, 'Save the Children', has revealed that estimated population of orphans in occupied Kashmir is 2,14,000 and 37 percent of them were rendered orphaned by the armed conflict.
In Bosnia, QC sponsors more than 2,505 individuals, with 2,205 of them being orphaned children.