Author Topic: Due Diligence Explained  (Read 1860 times)

Due Diligence Explained
« on: August 15, 2013, 01:54:21 PM »


  • Jedi NITE Killer
  • Posts: 8561

Here is the MacDaddy of DD explained

When doing due diligence, this is exactly how I do it. If you want to use this guide, thats fine, if you have your own methods, thats fine too. I welcome any ideas and/or input. I do not pretend to know everything or claim mine is the best way. It's just one way. I'm sure there are better ways out there somewhere since I am self taught.

IMO a DD-Amanda Subscription is a must!  I repeat I CANNOT DD WITHOUT  DD-Amanda. Trying to DD without that program is a joke. Its proprietary, Hans is a super cool dude,  the subscription comes with incredible things that to me are absolutely priceless. If signing up tell Hans you are from here or just say JEF451 as the secret family code for a discount.

-Free Add-on#1 SPY8K program. This is a standalone proprietary SEC scanning software that is configurable to search filings for certain keywords in real-time & instantly send you an email the second something is filed.

I have a email client with an RSS feed that flashes every filing that meets my criteria on a monitor screen. This program normally costs $350.00 per month and comes with DD-Amanda for free.

Free Add-On#2 -Access to Amanda Treehouse Chat. Again, very, very valuable. Hans has been doing this so long he's Grandfathered in at IHub. Just having someone like that at your fingertips, that is a hellava nice guy is worth 10x the monthly subscription fee IMO.

Free Add-on #3 Hans has a hookup to get reinstatements first. I don't know how he does it, but he gets what we call "Refers" waaaaaay before everyone else & refers are almost guaranteed to be 5-10 baggers. Amanda members get in first, then the public is notified sometimes 10-15 minutes later.

There are tools traders can get no where else such as seeing every trading day going back 9 months and identifying insider buying on any particular day. It also has DD buttons already plugged in which are priceless.

To begin:
1.) Open DD-Amanda
-Check for reverse splits, forward splits, ticker changes. If there are a lot-PASS
-Check every open & close to see the bottom and the top. If its near the average high trade-PASS
-Look to see how long its been trading? . The newer the better.
-Check for cycles. Does it run every month, every year, twice a year? etc.
-Click IHub radio button to see every single post on IHub. See who's in it. Is it being pumped? How long have they been in?, what price did they get in? How many shares & at what price are below you?
-Check the "Fact" to see insider trades. The larger the number, the closer to present date the better.

2.) The ShareStructure
DD-Amanda has an OTC button. Click it.
Check OTC or Pink level.
Yield =Maybe,
Stop=Oh Hell No!,
CE=Are you out of your friggin mind? Give you money to the beggar at the freeway off ramp. At least he's honest.

-Check share structure. The lower the OS the better.
May have float. If so, the lower the better. Anything in single digits in millions is insanely low.
-Check for news
-Check CPA firm
-Check Attorney
-Check Transfer Agent. Give them a call, ask for information like current OS, restricted shares, outstanding options etc, then subtract that from OS for the float. If they are "Gagged" -PASS
You are clicking the CPA & Attorney to see the history of their representation. I doubt many of you will recognize pump & dump attorney's so look to see if you recognize pump & dump tickers. Not very many attorney's or CPA firms will represent a pump & dump so its a small group that's easy to check. In addition many P&D attorney's are in on the scam so the ticker performance can almost be judged by the attorney that sponsored it.

3.) Check Edgar
-Check company info and get the name of the CEO then go to
use the search and check there for litigation and/or filings in his name

Click Knobius button.
-Check filings
-Check to see if they have had some emailers or news.

Click Nevada State button
-Obtain the legal name of the company and to to the state it is domiciled in and then google.."state sos" state being the name of the domiciled state.
-Go online and try to ascertain whether or not the corporation is up to date in their state filings and while you are at it, get the authorized shares. This can be important for non reporting companies. With reporting companies, a/s is a moot point without a registration filing to increase i/o, contrary to what you read on messageboard by nervous rookies. listed above is nevada, for instance.

4.) Check Google finance
a. CEO name
b other names associated
c. search: symbol spam (example)
d. ceo name: john doe vs.
e. ceo name: john doe litigation
f. full company name

5.) Check Domain
-Check out their website. See how long they have been around, and look for partner sites.
-Sometimes if they have 3/4 other sites tied in under various other business models this can be a flag

6.) Check NASDAQ
This site can be difficult so don't waste a lot of time here.
-Learn to navigate around this site for filings. Once you have found the filings Check 8k's,S1, 10q, s8, sb2, regdex, form 4's.
These are your most important filings. If you dont know what they are use this link-->

-Read most current 10K to find their story.
*How much money they have.
*How much money they make or how much they lose.
*How many shares are held by insiders.
*How many convertible notes have been sold, and when they are coming due.

7.) Check IHub, Yahoo, Stockhouse, WSSR & Raging Bull message board posts.
-Do people like the stock, hate it, optimistic about it, etc, and if they don't like it, is it because its at a bottom?
-That's usually the main reason, your thoughts and their thoughts may be 180 degrees apart because they are bag holders and you are not.
-Are there bashers? Bashers do not bash bad stocks so that's a good sign.

8.) Check promotions is a good one and they are free
See if its a paid promotion I.e...Pump& Dump.

9.) Check other research sites like Aim High Profits to see if the have ever written it up or have an opinion. I do not trust any other site.

10.) Check relationships -Marketvisual
Search officers names for past relationships and work history.

11.) Check Level II
Looking to see which market makers are in control. If dilutors, wait until they are gone.
-Check to see how the scales are balanced. If more market makers are on the bid side than the Ask, that's a very good sign. The opposite can be bad.
-Check spread. Wide can be good if you are buying at the Bid. This is a whole other topic I could write pages on.

The three D'd of Due Diligence facts!
Due dilligence is NOT checking with other people on a messageboard who also dont know how to do any of the above....
Due diligence is NOT checking with the CEO
Due diligence is NOT checking with the IR guy the company is paying

If you dont see too many flags or negative input, you may have your self a play. There is plenty more I do when getting intensive, but this is a fantastic first wave of DD.