Most investors' stock research consists of scanning the news headlines on Yahoo!, watching CNBC and other TV business shows, and, in more advanced cases, checking out the financial information presented on websites such as The Motley Fool, Yahoo!, or MSN Money.
But for in-depth study, investors should check out some of the common forms that companies must file with the federal Securities and Exchange Commission (SEC). The simplest way for most investors to find a company's SEC filings is to go to the SEC website and use its free search capabilities. Or check out the company's website.
The annual report: 10-K
This is the most important and detailed report filed by any company. Sections include management's discussion of operations, risks, and threats to the business; division and geographic results; financial statements for the year (only the 10-K has the statement of shareholder's equity); and the all-important footnotes to the financial statements.
The footnotes will explain and add information to many line items, and it is here that we can find out more about the structure of debt, commitments such as long-term operating leases, and the details of any investments. We can also check out the details and cost of employee stock option plans.
Foreign companies listed on U.S. exchanges (including most American depositary receipts) will file an SEC 20-F annual report. Most companies file within 60 days of the end of their fiscal year.
The quarterly report: 10-Q
This is very similar in structure and content to the 10-K. It contains information relating to the quarter just completed, comparison to the prior year's quarter, and year-to-date information. There is no 10-Q for the fourth quarter because that information is contained within the 10-K. Companies usually file within 35 days of their quarter's end.
Not all foreign companies have quarterly reports, although they may have half-yearly interim statements. A foreign company will file quarterly or half-yearly information in an SEC 6-K foreign issuer report.
Companies usually issue an earnings release (in a form 8-K) containing abbreviated and unaudited financials well before the 10-Q or 10-K is filed.
The current report: 8-K
The form 8-K's main purpose is to disclose any inside information that must be made public under Regulation FD (fair disclosure). It might not have the notoriety of the 10-K, but the 8-K shouldn't be overlooked.
Company press releases relating to earnings, changes in principal officers, mergers, and anything material to the business that an investor would likely want to know are contained within the 8-K. U.S. companies must post their 10-K, 10-Q, and 8-K filings on their websites. Foreign companies will use a Form 6-K.
The proxy statement: DEF-14A
The proxy statement is the notice of the annual general meeting of shareholders. For researchers, it is an essential addition to the 10-K in that it provides insight into the workings and intentions of senior executives and the board of directors.
The proxy includes the names of directors standing for election, shareholder proposals for vote, and the appointment of auditors. It is here that you will find the reports of the board's compensation and audit committees, and details of executive compensation. A proxy can sometimes be filed within an 8-K report.
Insider reports: Forms 3, 4, and 5
A company must report any purchase or sale of its stock by insiders on a form 4. With the exercise (a purchase) of employee stock options, you will often see an immediate sale of exactly the same number of shares -- a neutral event.
A form 3 is used to report a new insider, and a form 5 is an annual report of any transactions that were not reported on a form 4, or were subject to deferred reporting. Companies must file a form 4 within two days of the transaction, a form 3 within 10 days, and a form 5 within 45 days of the end of their fiscal year. Companies must post these reports on their website.
5% ownership: 13-D and 13-G
An individual acquiring 5% or more of any equity class in a company must file a Form 13-D. Persons acting on behalf of a broker, insurance company, investment companies, etc., must file a 13-G.
Institutional report: 13-F
Institutions or persons controlling more than $100 million in funds have to report all holdings on a quarterly 13-F report. The report will include company names, numbers of shares, and other securities held, and the market value. This is useful if you want to find out the latest holdings of your favorite mutual fund manager.
As you can imagine, the SEC has a vast number of reports and variations on reports. If you want further information on these SEC filings, the SEC website has some excellent tutorials and FAQs.
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