SEC Filings and What Traders Need to Know

Thu May 14, 2020, 04:40 pm | by Delaney | No comments

The SEC is a regulatory body that protects the securities market and aims to provide transparency between public companies and the public. Companies, investors, or institutions may be required to fill out SEC filings in certain scenarios. There are many types of SEC Filings, and today we’ll break down why you should pay attention, forms you should know, and how to find them.

About the SEC 

The SEC, short for the Securities and Exchange Commission, is an agency that is responsible for protecting the securities market.  According to the SEC’s website, their mission is “to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation.” 

The SEC plays a large role in keeping the trust of investors and public companies. Part of this job includes requiring public companies to file documents for a variety of different purposes to help provide transparency with the public.

These forms are free for the public to view through their EDGAR database, though with limited search capabilities. If you have a Benzinga Pro subscription or trial, you can enable these as a source in your Newsfeed, filter by stocks, and more in real-time. 

Why Pay Attention to SEC Filings 

SEC filings not only help with public trust, but they can also help investors and traders make trading decisions about a given company. Traders can use SEC filings to get an idea of how a company is performing, what their future may look like, get an idea of insider ownership, and more. Different SEC filings offer a lot of data and can give you an idea of what institutions or hedge funds think about a stock or sector.

SEC Filings for Traders to Know 

Registration Statements 

This is the document that companies file prior to its initial public offering (IPO). It comes in two parts: the prospectus and private filings. These documents include crucial information about the company, including financial statements, legal issues, company management, and more. It is a long, in-depth document. 

Form 10-K 

This is another long, in-depth document, and is a once a year analysis of a company. Companies need to submit a form 10-K within 90 days of their fiscal year. Items included in this form are organizational structure, financial statements, earnings per share, and more. The purpose of the filing is share the company’s financial position with investors so they can make informed decisions as to whether they should buy or sell shares. 

While these documents are long, they are very important and extremely comprehensive. The outline of a 10K form includes: 

  • Business Summary: An overview of its operations and how it makes money 
  • Risk Factors: Risks the company is facing, or may face down the line. 
  • Selected Financial Data: 5 years worth of the company’s finances. 
  • Management’s Discussion and Analysis: Discussion and analysis of the company’s finances and operational results. According to Investopedia, this is “where the company can tell its story in its own words.” 
  • Financial Statements and Supplementary Data: Audited financial statements are included in this section. This includes cash flow and balance sheets, and an independent auditor must write a letter certifying it was reviewed. 

While it may be a long document, if you know what you’re looking for, you can search for some key fundamental data. 

Read More: Beginner’s Guide to Fundamental Analysis 

Form 10-Q

A shortened version of the Form 10-K, it must be submitted at the end of the first three quarters of a company’s fiscal year. This shorter document gives information on the latest news and future direction. This document is not required to have an independent audit. 

Form 4 

This form gives information on the changes of insider corporate ownership. This includes officers, directors, or anyone with more than 10% ownership. A related form is the Form 5, which is the annual summary. This gives traders and investors an idea of what the insider ownership looks like, and what changes may have happened. 

Form 8k 

A Form 8K is filed when a major event occurs after the filing of a Form 10-K or 10-Q. This might include bankruptcy, acquisitions, executive departures or appointments, and more. 

Schedule 13D

This form, also known as a beneficial ownership report, details who owns large amounts of shares. Anyone owning more than 5% of a company’s stock must file this form within 10 days. Its purpose is to give transparency as to why someone owns a significant amount of stock. Form details include owner background, owner to company relationship, security class, funds origin and more. They are also required to share their reason for owning a large number of shares, such as being an activist investor, or just believing the stock is undervalued in the markets. Often, institutions and hedge funds need to file these, so you can get a feel for what companies or sectors they are involved in at the time, and why they might are doing so.

Form 144

This form is also known as “the Notice of Proposed Sale of Securities.” It is required to be filed when an executive, director, or company affiliate proposes to sell shares that exceed 5,000 units, or worth $50,000 in a three month period. 

How to Find SEC Filings in Benzinga Pro

It’s pretty easy to find SEC filings in Benzinga Pro! Here’s how to do it:

  • Open up a new Newsfeed
  • Choose the source: SEC

And that’s it! You can further refine the Newsfeed by searching for keywords, such as different SEC forms, tickers, sectors, or watchlist.

If you want to find SEC filings in Benzinga Pro, start your free, two-week trial here (no credit card required to sign up!).

SEC Filings Newsfeed in Benzinga Pro

Final Thoughts

Don’t overlook SEC filings—they can play an important role when evaluating stocks. They can also shed light on company insiders, institutions, and hedge funds.

Disclaimer: Benzinga is a news organization and does not provide financial advice and does not issue stock recommendations or offers to buy stock or sell any security. Benzinga Pro is for informational purposes and should not be viewed as recommendations. Benzinga Pro will never tell you whether to buy or sell a stock. It will only inform your trading decisions. You can find our full disclaimer located here.