In this week's Stansberry Investor Hour, Dan welcomes Michelle Leder back to the show. Michelle is the creator of footnoted.com, an information service dedicated to finding opportunities and early warning signals buried in U.S. Securities and Exchange Commission ("SEC") filings.

Michelle kicks things off by explaining what company proxy statements are and why they matter for investors. She says the summary compensation table and footnotes found in these documents let you know not only how much management is being paid but also what motivates their actions. Michelle emphasizes that as an investor, you need to know whether the company has your best interests in mind. She also says to look at director pay, as some officers sit on the boards of multiple companies and may not be likely to "rock the boat" and push for change. Another key component to examine is the related-party transactions that show you any disclosures in company spending...

You see these things, it's really not uncommon for the CEO to lease back [a] jet to the company. We see that pretty frequently... You also see family relationships. One of my favorite ones, Skechers... [had] like 10 different relatives on the company payroll, and they weren't being paid the $15, $20 an hour that you get to work at Skechers. Some of the sons were making $5 million, $6 million a year for jobs that were not even disclosed. What were they doing for that money? [...] If I'm an investor, I want to know about that.

Next, Michelle says that observing who the owners and top investors are is critical. You should also know how many shares investors have. She says knowing this will let you know if they "have any skin in the game" and will work to ensure that shareholders are being considered. Another aspect to look at is shareholder proposals. Michelle states that there's an argument to be made that proposals should come from shareholders with substantial positions rather than those with smaller stakes. And she gives her thoughts on AI utilization in SEC filings...

There's a lot of talk about AI writing the [SEC] filings that we're often being served now and also AI reading the filings and trying to determine what the tone of the filing is... At least so far, I'm finding that they're not getting all of the nuances, and they certainly can't get what's missing. So I don't know that they would have picked up or know the context of what's important. I use the tools as well... And I would say [they] doesn't always do as well as I would hope.

Finally, Michelle shares one stock that she warned her subscribers about before it fell dramatically over the past year. While some had believed that the stock would perform well, Michelle says the SEC filings were the key indicator to stay away from the company. She also addresses other small details that she looks for to evaluate a company's health and her strategy for short-term signals...

If I find something in an SEC filing, I might take a flier. And sometimes it's just a relatively short, small position. Maybe it's 100 or 200 shares. But I'll go in there, and I'll buy it and kind of look at it... and hold it for a little while to see if my theory is right or not... But you find these things, and they can be sort of telling.

Click on the image below to watch the video interview with Michelle right now. For the audio version, click "Listen" above.

(Additional past episodes are located here.)

The transcript is coming soon.

This Week's Guest

Michelle Leder is the creator of footnoted.com. Launched in 2003, this highly acclaimed information service uses proprietary search techniques that produce insight that is typically three to six months ahead of the market. She is also a Bloomberg Opinion columnist and the author of Financial Fine Print: Uncovering a Company's True Value.