Insider Information and Going Broke Institutional Investors' Performances Compared to the Markets

Institutional Investors and the CANSLIM Stock Strategy

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Every growing business needs the sponsorship of institutional investors in order to be taken seriously as a sound investment opportunity. For a company without such investors, the implication is that it is not good enough to be included in a portfolio put together by any one of the thousands of money managers on the prowl for the next great investment. The CANSLIM stock strategy takes this idea a step further and requires businesses to have a minimum of 3 institutional investors. However, too many institutional investors can be a problem as well. When this happens, the stock can potentially become more volatile in the event of a natural disaster or crisis, because institutional investors are apt to sell off. Since such investors tend to buy large chunks of stock at a time, too many sell-offs could send stock prices crashing. Therefore, CANSLIM stock strategy includes staying away from any company with more than 10 institutional investors.
Source: http://www.investorguide.com/igu-article-962-stock-strategies-the-canslim-stock-strategy.html