I = Institutional Sponsorship

CANSLIM recognizes the importance of companies having some institutional sponsorship. Basically, this criterion is based on the idea that if a company has no institutional sponsorship, all of the thousands of institutional money managers have passed over the company. CANSLIM suggests that a stock worth investing in has at least three to 10 institutional owners.

However, be wary if a very large portion of the company’s stock is owned by institutions. CANSLIM acknowledges that a company can be institutionally over-owned and, when this happens, it is too late to buy into the company. If a stock has too much institutional ownership, any kind of bad news could spark a spiraling sell-off.

William O’Neil also explores all the factors that should be considered when determining whether a company’s institutional ownership is of high quality. Even though institutions are labeled "smart money", some are a lot smarter than others.