Know Your SEC Forms: An "How to" SEC Filing Reference Guide for Traders & Investors (Boring But Essential!)
Know Your SEC Forms: An "How to" SEC Filing Reference Guide for Traders and Investors
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Most Recent SEC Filings Quick Reference:
Overview: With the wide spread availability of trading applications there came a number of retail traders who dove into trading without knowing the power of reading and understanding company SEC filings. SEC filings can provide critical indicators ("indicators" not "guarantees") as to a companies past and future performance. These documents can be an essential tool in helping an investor gauge whether to buy or sell a security. The purpose of the following entry is to provide a brief introduction to some of the most pertinent SEC Forms.
Why Read SEC Forms?: An important part of doing your due diligence on a company before you invest is checking out their most recent and historical SEC filings. These filings, if read and assessed properly with other market signals, may be a good indicator of a companies financial strength and institutional and insider confidence. For example, a microcap or smallcap trader will want to assess how long a company can remain financially viable without releasing another offering, or perhaps, assess at what price an investor may exercise a previously issued warrant. A midcap and largecap investor might want to know what institutions and insiders are buying, and to what extent a company is growing revenue. In short, learning to read and analyze SEC Forms (combined with other market conditions) will give you a competitive advantage as a trader.
EDGAR: There are a number of ways an investor can look up company SEC filings. However if you want to go straight to the horses mouth you go to the SEC's Electronic Data Gathering, Analysis, and Retrieval system; otherwise known as "EDGAR." I recommend simply typing in the ticker of your choosing into the "Fast Search" feature. From there you can find all of a company's SEC filings. If you really wanted to get savvy you can see all of your companies SEC filings as they are instantly filed by using your favorite RSS feed app. That's right! for your convenience the SEC has an RSS feature for practically anything you want to look for. That way you will be among the first to be alerted when a company you're tracking files with the SEC. And just to think there are websites that charge for this kind of alert feature! Like most alerting software, its just a rip off for something you can otherwise get for free.
SEC Forms: Now that you know how to access your favorite companies filings with the SEC lets look at the types of forms available. While you will likely want to know everything about the companies you invest in, not all forms are created equal. Some filings are much more important than others. I have included below what I consider the most important and why, but if you want to dig deeper you may opt to click HERE.
- SEC Form's 10-K [Annual Performance]: You will always want to review your companies last SEC Form 10-K . A company is required to file a 10-K annually. The 10-K is just like a quarterly earnings report, but it both covers the companies performance for the entirety of the previous year and the expected outlook for the coming year. The 10-K gets into the weeds of annual profit/loss, financing, sales, compensation, assets and liabilities, past performance, past contracts, expected future performance, the status of ongoing projects or pharmaceutical pipelines, and much more. You can find the latest SEC 10-K filings HERE.
- SEC Form 10-Q [Quarterly Performance]: The SEC Form 10-Q is a comprehensive report of a company's performance submitted quarterly by all public companies to the Securities and Exchange Commission. Similarly to the 10-K, the 10-Q itemizes profit/loss, financing, sales, compensation, assets and liabilities, past performance, past contracts, expected future performance, the status of ongoing projects or pharmaceutical pipelines, and more. You can find the most recent 10-Q filings HERE.
- SEC Form 8-K [Of Interest to Shareholders]: The SEC Form 8-K is used to notify shareholders and the SEC of important events. These events include but are not limited to press releases, public offerings and warrants, exercised warrants, pipeline advancement, financing decisions, modifications of shareholders rights, bankruptcies, failing to satisfy listing requirements, and more. Generally no matter what the 8-K is in reference to it nearly always affects the share price. You can see the most recent 8-K filings HERE.
- SEC Form DEFA14A [Upcoming Shareholder Vote]: SEC Form's PRE 14A and DEF 14A relate to matters requiring a shareholder vote. The first of the two forms is known as a "Preliminary Proxy Statement" whereas the latter is known as a "Definitive Proxy Statement." These forms are used to announce annual shareholder meetings where shareholders will vote on items like issuance of stock, reverse splits, changes of the company's articles of incorporation, shareholders proposals, election of directors, and other matters. While a trader or investor might first overlook this form if uninterested in voting, the DEF 14A may provide important indicators of the company's current finances and outlook much like that of an 8-K or 10-K. These forms also demonstrate what officers own what proportion of the company's stock and provide good indicators of a company's thinking on issuing or purchasing stock. If you are familiar with investing in microcap securities trading below $1.00 the DEF 14A will give you the exact date that the company is expected to regain compliance by. They also indicate if the company leadership is planing to request authority from the shareholders to conduct a reverse split. You can see the most recent DEF 14A's filings HERE.
- SEC Form 4 [Insider Trading]: The SEC Form 4 is otherwise known as a "Statement of Changes in Beneficial Ownership." Or in plain English, it is a mandatory disclosure that company insiders must file within 48 hours (business days) of purchasing or selling stock in their own company. While insiders are still forbidden to trade information not available to the public, there have been enough study's to demonstrate that in most cases insiders outperform those out of the know. Remember there is a difference between insiders acquiring securities as a benefit as opposed to purchasing securities. The code you're looking for here is (P). You can find the most recent SEC Form 4 filings HERE.
- SEC Form 144 [Large Insider Selling]: The SEC Form 144 is otherwise known as a "Notice of Proposed Sell of Securities." According to SEC Rule 144 an executive officer, director, or affiliate is required to file this form to the SEC when placing an order to sell that company's stock during any three-month period in which the sale exceeds 5,000 shares or units OR has an aggregate sales price greater than $50,000. Rule 144 regulates transactions of restricted, unregistered, and control securities. Generally these securities are bought in private unregistered sales or constitute a controlling stake in an issuing company. The SEC prohibits the resale of restricted, unregistered, and control securities, unless they are registered with the SEC prior to their sale, or they are exempt from the registration requirements when five specific conditions are met. You can find the most recent SEC Form 144 filings HERE.
- SEC Form 13F [Institutional Investment]: The SEC Form 13F is required to be filed quarterly by institutions with over $100,000,000 assets under management. Researching this form affords traders to see what "smart money" is doing in the market. You can find the most recent SEC Form 14F filings HERE.
Please note that insider buying or selling is not necessarily indicative of an insiders confidence, or lack thereof, in the company. Nor is institutional purchasing of securities necessarily indicative in the institutions' confidence in a given company. For more details of SEC Forms and the rules and regulations governing them I recommend visiting the SEC Forms List. To find other tools and resources that will assist in analyzing and assessing SEC Forms, to include alternative means to find SEC Forms, see HERE.
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IMPORTANT DISCLAIMER: I am NOT a registered investment adviser, broker dealer, or member of any other association for research providers in any jurisdiction whatsoever and I am NOT qualified to give financial advice. Investing/Trading in securities, particularly microcap securities, is highly speculative and carries and extremely high degree of risk. The information, analysis, and opinions listed above are my own and may not properly reflect the underlying conditions of a company or security. You should do your own Due Diligence. If you trade based on anything I have written YOU ACCEPT FULL RESPONSIBILITY AND LIABILITY for your own trades and actions and hold the author of this publication harmless. If that isn't clear enough DO NOT TRADE, ACT, OR INVEST, BASED UPON ANYTHING I WRITE OR RECOMMEND. There, we should be solid now.