Volume 26, No. 3

Guide to A Dying Art: Looking for What Matters in the 2016 10-Ks: In an investing world long ago and far away, reading a firm’s 10-K and annual report was a traditional winter and early spring investor activity - right up there with management meetings and earnings calls. The digital revolution of the last twenty-five years has changed all that: investors now pluck digital figures off the internet or sift through databases for just the needle in the haystack that they want. To some investors, reading the 10-K and annual report is no longer seen as a duty or a way to get smarter than the competition - it seems to be an anachronism, a veritable ball and chain clapped on the ankle that slows them down in reacting to a scrap of new news, delivered via data feed. (Or Twitter.)

As Adam Smith pointed out in “The Money Game:” if you don’t know who you are, the stock market is an expensive place to find out. Save yourself some money: If you spend time with the 10-Ks and annual reports, you might find out who you are without an expensive lesson from Wall Street. Not every bit of information in them has been completely digitized and funneled into an electronic device - especially that happy happenstance called “connections.” You don’t know what you might read in a 10-K that relates to some other fact you’ve learned elsewhere. Reading the 10-K can help you build a healthy store of knowledge that serves you well later. And if you pride yourself on being an independent thinker, you can’t be truly independent from the rest of Wall Street if you aren’t reading financial information on your own. The 10-K information is too good to pass up: it can show you something new, and it can change or reinforce your view held about a company and its management.

Maybe reading 10-Ks is a dying art - but it shouldn’t be. Free information is in them - it’s just that it must be consumed through your eyeballs, rather than hoovered up into a spreadsheet. It’s all food for thought. This report describes some new information for investors to consider as they research the new 10-Ks, and reviews some analyses that are possible only when the 10-Ks arrive.


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