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.
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