SEC Filings: What are they? How can they assist trading?

Investing with moomoo joined discussion · May 26, 2021 17:42

SEC Filings: What are they? How can they assist trading?

What are SEC filings?

SEC Filings are regulatory documents that companies and issuers of securities must submit to the Securities and Exchange Commission (SEC) on a regular basis. The purpose is to provide transparency and information to investors, analysts, and regulators.

How to look up SEC filings?

SEC forms are public documents filed through a system known as EDGAR (Electronic Data Gathering, Analysis, and Retrieval system). EDGAR performs automated collection, validation, indexing, acceptance, and forwarding of submissions by companies and others required by law to file forms with the SEC.

Information on EDGAR can be found on the SEC's website, where you can search through forms as well as familiarize yourself with the system using its EDGAR tutorial.

Typical forms of SEC filings

- Form 8-K: An 8-K is a report of unscheduled material events or corporate changes at a company that could be of importance to the shareholders or the SEC. Form 8-K is a valuable source of complete and unfiltered information for investors and researchers.

- Form 10-K: A 10-K is a comprehensive report filed annually by a publicly traded company about its financial performance and is required by the SEC. The report contains much more detail than a company's annual report, which is sent to its shareholders before an annual meeting to elect company directors.

- Form 10-Q: Form 10-Q is a comprehensive report of financial performance that must be submitted quarterly by all public companies to the SEC. In the 10-Q, firms are required to disclose relevant information regarding their finances as a result of their business operations. The 10-Q is generally an unaudited report.

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- Prospectus: A prospectus is a formal document that is required by and filed with the SEC that provides details about an investment offering to the public.

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- Form 13F: In order to increase public information regarding securities holdings, SEC requires all institutional investment managers with control over $100M in assets to file Form 13F quarterly to list all equity assets under management. It discloses their equity holdings and can provide some insights into what the smart money is doing in the market. See detailed discussion on 13F: Form 13F: What is it? How can you benefit from it?

Why these forms matter?

- Provide material information. SEC filings provide transparency and crucial information for investors. You can know the facts to make well-informed decisions about when to buy, sell, or hold a company's securities. Obtaining the available material and interpreting it correctly can provide you with valuable guidance when making investment decisions.

- Provide a deeper understanding of the company. Understanding the information submitted by companies through SEC filings involves reading between the lines. Review several SEC documents together to better understand the overall picture.

- Help spot red flags. Red flags are often revealed in a company's footnotes. Red flags include a very confusing section(s) in a 10-K or 10-Q, sudden one-time or special charges, or a large degree of insider selling.

In the next article, we will discuss how you can speed-read SEC filings to seize the most important information as quickly as possible.