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

Institutional Investors and the CANSLIM Stock Strategy

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.