Dedicated template and process: due diligence on businesses

[crimelabs786]

Due diligence, or DD, is a popular way of presenting analysis on a stock.

However, it can often be overwhelming to do a proper DD on a business. For a whole lot of retail investors out there, it can be near impossible.

Then there are charlatans, who present numbers out of content, to appear smart or feel superior. Presenting random numbers is NOT a due diligence.

A due diligence should adequately convey strengths and weaknesses of the business, and put it in context with respect to the sector and its peers.

Assume that retailers who are taking an interest in doing due diligence, are at level 0. And at the other end of the spectrum you've your Valuepickr top contributors who can finish researching a company in a single day - say these are at level 5.

Our goal is to provide a process and template in the DD endeavor, so someone can go from level 0 to level 1 or level 2. Really interested curious people can go to level 5, once we've given them a launchpad to go to level 2.

We've also seen other forums like Valuepickr, or r/SecurityAnalysis etc. While there are good to great DDs, these are present in a comment form. If a user decides to find some DD on Alphabet or L&T Infra, they'd have to go through a comment chain of 400+ comments spanning over 5-6 years. These content are not present / archived in a readily consumable form (not a criticism for these forums, if it works for their members / readers, it's a great thing - but it also scares a lot of people away).

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Armed with these insights, here's how we envision DD would look like.

• A DD must clearly call out that this is NOT a recommendation to buy / sell / double down / hold. It's just a discussion on the company's fundamentals; that's all. Investing conviction is a separate matter, not in the scope of the DD.

• A DD of any business have to "check off" some basic items in a checklist, for it to pass a minimum bar. A good starting point can be this template -- thanks @Itsmarzil

• DDs would start out as a collaborative project, ideally by more than one person. Different people can fill out different parts of the DD template, and that's a good start.

• DD of a company can change, when there's a major or minor fundamental change. We use semantic versioning to version our DDs on GitHub.

  For instance, imagine v1.0.0 of a DD on ITC available in our repository. Now Govt. relaxes some tax criteria or ITC decides to get out of one of its business arms. This is a major change, and would require an updated version be published as v2.0.0.

  Benefit of this, is anyone can access latest DD of any company, and if they choose to, they can also go through change logs of major / minor versions. Every quarterly result should publish a new "bugfix" version if there's no fundamental change.

  GitHub releases are perfect for this workflow.

• Schedule automated posting on Discord / Reddit.

  If the change is routine and result of quarterly result or corporate action, it can just be pushed to Discord via some bot, streaming the changelong.

  If the change is somewhat material, it can be manually shared on Discord / Reddit. For us, GitHub is the archive, and Reddit / Discord are dissemination platforms.