The “I” in the formula stands for institutional sponsorship. The institutional buyers are by far the largest source of demand for stocks. Leading stocks usually have institutional backing. However, although some institutional sponsorship is desired, excessive sponsorship is not, because it would be a source of large selling if anything went wrong with the company or the market in general. This is why the most widely owned institutional stocks can be poor performers. By the time a company’s performance is so obvious that almost all institutions own a stock, it is probably too late to buy.
