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Red Flags Continue to Accumulate for DJSP Enterprises, Inc

|Includes:DJSP Enterprises, Inc. (DJSP)

Since there are more equity investors on the long side than on the short side, posts on some message boards can have a bullish tilt -- even if there are a lot of red flags about the stock in question. Sometimes the bullish bias is reinforced by moderators who delete bearish or skeptical posts and ban those who write them.

The message boards on Short Screen -- one of the investing apps in Seeking Alpha's new Investing App Store -- were designed to offer a forum where there is no bias against skeptical or bearish comments. The Short Screen message boards include a premium ranking system to highlight the comments rated highest by the community.

One of the Short Screen commenters whose comments are consistently highly rated goes by the handle "Avoidthegarbage". Avoidthegarbage made a prescient short call earlier this year on JBI, Inc. (then JBII.OB; now JBII.PK), when that stock was trading at over $5 per share (its closing price Tuesday was 81 cents).

A couple of months ago, Avoidthegarbage turned his spotlight on DJSP Enterprises, Inc. (OTC:DJSP), and didn't like what he saw. Early this week, he raised more concerns about the company. Below are his most recent comments on it:

10/11/2010 10:50 PM by avoidthegarbage
Seems there is increasing scrutiny of the foreclosure markets and with DJSP centered the way they are with the foreclosure markets it still seems like a decent short idea. Yes it has a tremendously low PE but the more I try to look where the cash from earnings has gone previously the more I kinda have that little voice in the back of the head going 'hmmmm'.

I believe the company had the recent class action stuff on them plus now the whole industry looks like it is getting scrutinized with the above article.
Throw in that when I looked to see what happened to the company's huge earnings numbers as far as where cash went on the balance sheet and it looked to me like the CEO had been pocketing it for the most part (as compensation I guess).
Makes me keep going 'hmmmm'. I am not short this but am watching to see how this turns out and have had my eyebrow raised on them since the double digits. Don't think I posted about them here though until they were well below those highs.

10/12/2010 09:19 PM by avoidthegarbage The company does not have a lot of cash on its balance sheet. With the class action suits and the further scrutiny intensity on this segment of industry, what happens if they settle for large $ amounts or have other legal claims against them? Remember, IMO most of that big $ they made last couple years already got paid out as 'Distributions and dividends' per their annual filing (page thru to cash flows).

10/12/2010 09:46 PM by avoidthegarbage

Also saw this general article from Yahoo:

10/12/2010 09:53 PM by avoidthegarbage

This doesn't look good for Stern and DJSP IMO:


Disclosure: No positions

Disclosure: No Positions
Stocks: DJSP