What are SEC Filings?
All publicly-traded companies in the United States fall under the U.S. Securities and Exchange Commission (SEC) jurisdiction. Public companies, certain insiders, and broker-dealers are required to formally submit financial statements and other formal documents (i.e. SEC filings) to the SEC on a regular basis. Major SEC filings (such as 10Qs, 10Ks, and 8Ks) contain information on a company's financials (balance sheet, statement of operations, segment of profit, etc), business segment performance, and perceived competition.
What do SEC Filings contain?
SEC filings are one of the most direct ways to discover company-specific financials, metrics, business plans, security issuances, ownership and executive changes, and M&A considerations. They are filled with boilerplate/standardized language and contain many forward-looking statements but with AlphaSense you can garner information faster than ever. You may see some documents specifically tagged to CIK numbers, which are assigned by the SEC to Organizations and individuals.
Types of SEC Filings
Registration statements provide information about the company’s financial condition as well as any securities that are being offered. A company preparing to offer securities to the public – either for Initial Public Offerings (IPOs) or follow-on offerings of new securities – must first file a Form S-1 registration statement with the SEC which contains 2 parts; the prospectus and any additional information. These filings include a description of the issuer's business and assets, a description of the security being offered, the names and bios of the company's key management, and an independently certified copy of the issuer's latest financial statements.
A Prospectus is a mandatory document that must be given to any person who is offered to buy the company's securities. The prospectus includes mandatory details about the company's management, financial health, business operations, operational results, and risks. Additionally, all financial statements such as the company's income statement must be audited by an independent certified public accountant (CPA).
The company will also likely provide any relevant additional information, such as recent sales of unregistered securities.
Example Search: Notes and Securities Offerings
Form 10-K is a report on the company’s financial condition that is released annually within 60 to 90 days of the close of their fiscal year. While the information may overlap, the Form 10-K is not the same as the Company's Annual report.
The Form 10-K contains several sections including:
Business summary: This describes the company's operations and includes information about business segments, products and services, subsidiaries, markets, regulatory issues, research and development, competition, and employees, among other details.
Management Discussion and Analysis: This section explains the company’s operations and financial results for the past year.
Financial statements: The financial statements include the company's balance sheet, income statement, and cash flow statement. Investors use this financial information to construct ratios and other metrics involved in Fundamental Analysis: revenue, earnings, return on equity (ROE), profit margins, and equity multiples – all of which help determine a company's underlying value and potential for future growth.
Additional sections: Additional sections may discuss the company's management team and any legal proceedings that may indicate future charges, liability, or volatility
Form 10-Q is a shortened version of Form 10-K as it is filed quarterly. This form provides insights into the company's ongoing financial condition throughout the year. The Form 10-Q is required to be submitted for the first three quarters of the company's fiscal year. A key difference between the Form 10-K and Form 10-Q is that the financial statements in Form 10-Q are not audited, and the information required is less detailed.
The Form 8-K is what companies use to disclose major developments that occur between filings of the Form 10-K or Form 10-Q, such as: bankruptcies or receiverships, material impairments, completion of acquisition or disposition of assets, or departures or appointments of executives.
Example Search: Statement of Cashflow
Proxy Statements inform investors of the salaries of the management of a company and any other perks that a company's management is eligible for. The proxy statement is presented before the shareholder meeting and must be filed with the SEC before the company can hold a shareholder vote on the election of directors and approval of other corporate actions.
Example Search: Proxy Vote Information
Forms 3, 4, and 5
Corporate insiders must file Forms 3, 4, and 5. A corporate insider is “a company's officers and directors, and any beneficial owners of more than ten percent of a class of the company's equity securities registered under Section 12 of the Securities Exchange Act of 1934," as defined by the SEC. These forms are intended to reveal more information about the securities that company insiders own. If an insider is buying more shares, this may signal they see more potential in the company, or know about insider events a normal investor would not (such as a possible merger or acquisition) – or, they simply think the stock is undervalued Insiders tend to purchase more securities when they think the company has long-term performance potential.
Form 3: is the initial filing and discloses ownership amounts.
Example Search: Securities Ownership Changes
Form 4: identifies changes in ownership.
Example Search: Changes In Ownership
Form 5: is an annual summary of Form 4 and includes any additonal information that should have been reported.
Example Search: Securities Statement
The Schedule 13D report may also be referred to as the "beneficial ownership report" and is required when any owner acquires 5% or more of the voting shares in a company. Schedule 13D can warn individual investors about changes to corporate control, particularly the consolidation of insider ownership which could have negative consequences, or signal a company being acquired or bought out (which would benefit shareholders).
The information includes the following.
The acquirer's name, address, and other background information
Type of relationship this owner has with the company
Whether the person has been convicted of a crime in the past five years
An explanation of why the transaction is taking place
The type and class of the security
The origin of funds used for purchases
Example Search: Percent of Class Represented
Form 144 is required to be filed when corporate insiders want to dispose of company stock. Form 144 is used as a notice of the intent to sell restricted stock, which is typically acquired by insiders or affiliates in a transaction not involving a public offering. The Form 144 is required when the amount sold during any three-month period exceeds 5,000 shares or $50,000.
Example Search: Insider Selling of Securities
Foreign Investment Disclosures
The SEC updated disclosure requirements for foreign companies offering securities in the U.S. market in 2008 requiring them to post disclousures in English on the internet. In addition, the deadline for foreign companies to submit their annual reports was shortened to 4 months as opposed to 6 months.
Example Search: FID
Why are SEC Filings beneficial?
SEC filings are a way to get accurate information on company financials, metrics, business plans, security issuances, ownership, executive changes, and M&A considerations to get a complete picture of a company’s standing.
Investors and analysts utilize registration statements to understand newly issued shares or bonds that will come to market. The statements include a description of the issuer's business and assets, securities being offered, the names and bios of the company's key management, and an independently certified copy of the issuer's latest financial statements. The prospectus portion of the document provides all relevant information to perform a quantitative evaluation and any information that could be deemed a red flag or risk factor.
Form 10-Ks keep you aware of the company's financial condition and allow you to have adequate information before buying or selling securities issued by the company.
Like the 10-k this form keeps you aware of the company’s financial condition but since it is filed quarterly, it allows you to update their valuation metrics and financial ratios throughout the year without having to wait on the Form 10-K
Form 8-K provides you with timely updates on significant events at a company. Many of these changes have been defined explicitly by the SEC (such as a merger or acquisition), but others are simply events that firms consider to be noteworthy for their shareholders (such as a new product release or upgrade).
The proxy statement allows you to cast your votes using a designated person (a “proxy”), who aggregates the votes via mail, phone, or online and casts them on your behalf. The statement presents the items that you will be voting on and allows them to inform the proxy how to cast their vote.
Forms 3, 4, and 5
These forms offer insight into the trading activity of corporate insiders and large institutional investors, which allows you to get an indication of a stock's prospects. While insider or institutional ownership on its own is not a buy or sell signal, it offers a useful screening when searching for a good investment
Investors use Schedule 13D to detect red flags in the consolidation of insider ownership which can be potentially harmful to individual shareholders. But the Schedule 13D can also provide warning signs of a company being acquired or bought out, which could benefit shareholders.
Form 144 is useful for knowing how many potential shares will be offered for sale on the open market after the lock-up period for a new issue, such as an IPO, expires. Form 144 can also indicate how much a stock price might suffer in the event that a lot of new sale orders enter the market when the lock-up period ends.
Foreign Investment Disclosures
Many investors look to diversify their portfolios geographically by including holdings of non-U.S. companies;these documents provide key insights into the company in a similar fashion to U.S. companies
Additional SEC Filings
AlphaSense continues to expand it’s content coverage and has brought in additional SEC filings to the platform which include the following: SD/SDA, X-17A-5/X-17A-5A, CERT, EFFECT, N-CEN.
SD/SDA: the Specialized Disclosure Report regarding conflict minerals disclosures.
X-17A-5/X-17A-5A: must be filled out by all broker-dealers that are registered with the SEC. The form is used to report a broker-dealer's financial and operating conditions: Part I is general info about the registrant, along with operational capital charge items that are designed to measure certain economic and financial characteristics of the registrant. Part II contains the annual audit. Part III contains identification information about the registrant and the accountant.
CERT: represents the certification by an exchange approving securities for listing.
EFFECT: the effectiveness notices will be distributed as an EDGAR form type called "EFFECT." Consequently, for the first time, an interested person can search for a company's filings and be able to see when the staff declared a particular Securities Act registration statement effective.
N-CEN: an annual report for registered investment companies and to be used by all registered investment companies, other than face-amount certificate companies, to file annual reports with the Commission.
Key AlphaSense Features:
Table Explorer- Table Explorer automatically stitches similar tables together to create a single historical table of any numeric chart in major SEC filings (10Q, 10K, 8K, 20F, 40F) without ever having to leave the AlphaSense platform.
View All Tables- View and export all tables located within this filing in one view