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By Jeremy Glaser | 11-05-2010 11:55 AM

Much to Find in Filings

Information in SEC filings will often let you know if there's a significant problem with the company before that becomes common market wisdom.

Securities mentioned in this video
INTC Intel Corp
C Citigroup Inc

Jeremy Glaser: For, I'm Jeremy Glaser.

I'm here today at the 2010 Morningstar Stocks Forum, and I'm joined by Michelle Leder, who's the founder and editor of, which Morningstar acquired a few months back.

Michelle is an expert in SEC filings, and I thought I'd get a chance to talk to her to see how investors could get the best use out of them.

Michelle, thanks for joining me.

Michelle Leder: Thanks for having me, Jeremy.

Glaser: You get a lot of alerts that say "New SEC filing" for one of your holdings. But a lot of them seem indecipherable. You have 8-Ks, you have 10-Ks, you have 10-Qs. How can investors make sense of all of this information that is coming at them?

Leder: The problem, the reason it isn't decipherable is that a lot of companies go out of their way to make it that way, first of all, because the rules are very clear. Companies are required to disclose a lot of information. But that doesn't mean they have to make it easy for the average investor, or even the more sophisticated investor to find the information they're looking for.

As a general rule of thumb, though, you want to pay attention to the key filings that a company that you have an investment in, is making. If it's a small investment, obviously you don't have to pay as close attention. But if it's a significant investment for you in a particular equity, you really need to be paying attention to those filings.

Glaser: What are some of those big filings you should watch out for?

Leder: Well, obviously, the big filings are the 10-K, which is the annual report. And when I say annual report, I don't mean the pretty one with the photographs, and the CEO shaking the hand of the janitor. We mean the actual annual report. The 10-K.

In addition, there are three 10-Qs that the company is required to file. And there are also periodic 8-Ks. I also think it's a good thing to take a look at the proxy statement. And that's sort of the bare minimum. From there you have some additional filings as well, for special situations, and so on. But those are the basic filings you should be looking at.

Glaser: So when you think about the annual report, which is probably the document that investors turn to the most, what are some of the key sections and key areas you should hone in on, and what are parts that you could ignore? Sometimes these things are 300-400 pages long.

Leder: Some of them are actually 1,200 pages long. If you look at Citigroup's 10-K from last year, I believe, it was well over 1,000 pages, if I remember correctly. With the exhibits and everything, it was actually 1,200 pages, which is longer than Anna Karenina, or some Russian fiction. I think we calculated it out; it's not quite as long as Proust, but it's getting close to it.

So, obviously the name of my site is, and what we pay attention to very closely is the footnotes, because you have the numbers, and then you have the story behind the numbers. And I think that that's important to pay attention to, particularly if it's a significant holding for you.

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