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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 ?
Hollingsworth, "Education," The Orphans Friend 1 (March 1872): 1; Bernard Washington Spilman, The Mills Home (Thomasville, N.
The Pendulum Project is a non-profit humanitarian organization that helps families and communities care for, support, and protect orphans and vulnerable children in Malawi, a sub-Saharan African country, where the AIDS epidemic is raging.
In less than four years, the Rufaqaa initiative has made Qatar Charity the largest orphan care organisation worldwide, sponsoring 106,000 orphans including the sponsorship of 73,000 orphans over the past four years alone.
POCF is a platform created by around twenty national and international charitable organizations for welfare, protection and upbringing of orphans in Pakistan.
Each villa will cost about SR 2 million and will also cost about the same for its maintenance and upkeep," he said, adding that each villa would accommodate between 18 and 20 orphans.
Some orphans displayed some of their talents on the stage including comedian sketches, poems, plays, and songs.
Dar Al Ber sponsors 26,000 orphans in 39 countries and 650 from within the UAE.
As the train stops at various towns across the country, people interested in taking the orphans come to look them over.
Pet Orphans, one of the San Fernando Valley's oldest nonprofit humane shelters, will waive adoption fees for ``Ultimate Valentines'' - animals 5 years and older - through Wednesday.
In addition, WWO has received approval from the Ethiopian government to treat orphans with HIV/AIDS.
In less than four years, the Rufaqaa initiative has made QC the largest orphan care organisation worldwide, sponsoring 106,000 including 73,000 orphans sponsored over the past four years alone.
Al-Yafei thanked the people of Qatar for supporting the orphans.