Michelle Leder unearths nuggets that companies bury in routine Securities and Exchange Commission filings. She blogs about her discoveries at Footnoted.org.
Where's the best place to find these filings?
A number of places: EDGAR (the SEC's online database of corporate financial information), a company's Web site under "investor relations" or a number of free and subscription sites, such as SECWatch.com. Unfortunately, these filings aren't easy to plow through. Bank of America's recent Form 10-K report was over 750 pages. And the language can be daunting.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
So what's an investor to do?
It's up to investors to do due diligence if they want to own individual stocks. If that seems like too much trouble, then maybe you belong in ETFs or mutual funds. Pay attention to key documents, such as the 10-Q, which is filed quarterly, and the Form 10-K, filed annually. Don't rely on a company's glossy annual report with the pretty pictures; you want the 10-K with a lot of heavy writing. Companies are required to file documents, but they're not required to make reading them easy on investors.
What should we look for?
In 10-Ks and 10-Qs, look for the list of the company's risk factors and look at the financials. See whether there are significant differences from what the company reports in its press release. I have yet to see regulators go after companies for overstating facts in a press release. "Record earnings," "record revenue," "record growth" -- when I see that hyperbole, I put the company on my watch list.
Are there other filings to watch?
The other one is the proxy statement: officially, Form DEF 14A. That's where you'll find the juicy stuff, such as executive compensation. I like to pay attention to how much directors are making. The other day I saw three directors of the same company who make more than $600,000 a year each -- for a part-time job. How many questions will they ask? Are they really going to rock the boat? Check out any related-party transactions -- business dealings with insiders or affiliates. Are the deals the best use of shareholder money? Look at how perks are doled out. Use of the corporate jet comes up a lot -- that's expensive. When you see millions of dollars a year spent on personal use of the corporate jet, you have to wonder, When are these people working?
-
Stock Market Today: Stocks End Higher in Whipsaw SessionThe main indexes were volatile Thursday with Nvidia earnings in focus.
-
Trump Picks Dr. Oz as Head of Medicare and MedicaidPresident-elect Donald Trump picked Dr. Mehmet Oz to lead the Centers for Medicare and Medicaid Services. Here's what to know about the former TV host.
-
Best Banks for High-Net-Worth Clients 2024wealth management These banks welcome customers who keep high balances in deposit and investment accounts, showering them with fee breaks and access to financial-planning services.
-
Stock Market Holidays in 2024: NYSE, NASDAQ and Wall Street HolidaysMarkets When are the stock market holidays? Here, we look at which days the NYSE, Nasdaq and bond markets are off in 2024.
-
Stock Market Trading Hours: What Time Is the Stock Market Open Today?Markets When does the market open? While the stock market does have regular hours, trading doesn't necessarily stop when the major exchanges close.
-
Bogleheads Stay the CourseBears and market volatility don’t scare these die-hard Vanguard investors.
-
The Current I-Bond Rate Until May Is Mildly Attractive. Here's Why.Investing for Income The current I-bond rate is active until November 2024 and presents an attractive value, if not as attractive as in the recent past.
-
What Are I-Bonds? Inflation Made Them Popular. What Now?savings bonds Inflation has made Series I savings bonds, known as I-bonds, enormously popular with risk-averse investors. So how do they work?
-
This New Sustainable ETF’s Pitch? Give Back Profits.investing Newday’s ETF partners with UNICEF and other groups.
-
As the Market Falls, New Retirees Need a Planretirement If you’re in the early stages of your retirement, you’re likely in a rough spot watching your portfolio shrink. We have some strategies to make the best of things.
