SEC Filings

SEC Filings are official documents that publicly traded companies in the United States are legally required to submit to the U.S. SEC (Securities and Exchange Commission). Think of the SEC as the financial market's referee, ensuring fair play by making sure companies provide regular, truthful, and comprehensive information to the public. These filings are the primary way it accomplishes this. For a value investor, these documents aren't just bureaucratic paperwork; they are a treasure trove of unfiltered information, straight from the source. They contain everything from a company's financial health and business strategy to the risks it faces and how much it pays its top executives. Reading them is a fundamental skill for anyone serious about understanding a business before investing in it, allowing you to move beyond market hype and make decisions based on facts.

In a world full of flashy news headlines, analyst opinions, and stock-pumping gurus, SEC filings are your direct line to the truth. They are the raw, un-spun data that tells you what's really going on inside a company. Legendary investors like Warren Buffett have famously spent countless hours poring over these documents. Why? Because they know that a company's story—its strengths, weaknesses, opportunities, and threats—is written within these pages. For the value investor, this is where you do your homework. You can:

• Verify if a company is truly as profitable as the news claims.
• Understand the real risks that could sink the business.
• See if management's interests are aligned with shareholders (that's you!).
• Discover hidden value that the rest of the market has missed.

In short, learning to navigate SEC filings is like being given the keys to the company's private library.

While there are dozens of different forms, a handful provide the bulk of the information you'll need. Here are the essentials:

The 10-K is the big one—a comprehensive, audited annual summary of a company's performance. Think of it as the company's annual “state of the union” address, but with much more detail and legally binding accountability. It’s the single most important document for deep-dive research. Key sections to check out:

• Business: Management describes what the company actually does, its products, markets, and strategy.
• Risk Factors: The company is legally required to disclose everything it thinks could go wrong. This is a must-read.
• Management's Discussion and Analysis (MD&A): Management provides its own narrative on the financial results. Read this to understand their perspective, but always cross-reference it with the hard numbers.
• Financial Statements and Supplementary Data: This is the heart of the report, containing the income statement, balance sheet, and cash flow statement.

The 10-Q is the little brother of the 10-K. It’s a quarterly report that provides an update on the company's performance. It is less detailed than the annual report and is usually unaudited, but it’s crucial for tracking a company's progress throughout the year and spotting any emerging trends or issues long before the 10-K is released.

If a company has major, unscheduled news to report, it files an 8-K. This is the “breaking news” filing. It’s used to announce significant events that shareholders should know about right away. Common triggers for an 8-K include:

• Mergers and Acquisitions
• The hiring or firing of a top executive (like the CEO or CFO)
• Bankruptcy filings
• Major changes in the company's financial condition

The Proxy Statement is sent to shareholders before the annual meeting to ask for their vote on key issues. But it’s much more than an invitation. This is where you find critical information about Corporate Governance. You can see how much the top executives are being paid (and how their pay is structured), learn about the qualifications of the board of directors, and read about any shareholder proposals. It's the best tool for judging whether management is working for themselves or for you.

These forms track the stock holdings of company insiders (directors, executives, and large shareholders).

• Form 3: Filed when a person first becomes an insider.
• Form 4: The most important one! Filed whenever an insider buys or sells shares of the company. A pattern of insider buying can be a strong positive signal.
• Form 5: An annual summary of insider transactions not reported on a Form 4.

Watching what insiders do with their own money—known as tracking Insider Trading—can offer powerful clues about a company's future prospects.

Finding these documents is easy and free. You have two primary sources:

• The SEC's EDGAR Database: EDGAR (Electronic Data Gathering, Analysis, and Retrieval) is the official public repository for all SEC filings. It’s a bit clunky, but it’s the most comprehensive source.
• Company Websites: Most companies have an “Investor Relations” or “Investors” section on their website. They often post their SEC filings here, sometimes in a more user-friendly format than EDGAR. This is usually the best place to start.