I'd be a better investor if I had more in common with Michelle Leder. What I like to read most is modern fiction, such as Jeffrey Eugenides' Middlesex or Keri Hulme's The Bone People, or biographies, such as Nien Cheng's Life and Death in Shanghai. [Get lots of great reading ideas on our Eclectic Library discussion board.] Michelle Leder, though, seems to most enjoy reading the footnotes of annual reports.

That's good for her -- and it's also good for us, because she runs a blog, www.footnoted.org, where she shares interesting tidbits she runs across. Here are some examples. See if any of these firms are ones in which you've invested, or are considering as investments. Regardless, you'll learn about some red flags to watch out for.

  • In a recent filing, the tiny ($40 million market cap) firm of Competitive Technologies (AMEX:CTT) revealed that it's facing a mountain of lawsuits. Details show that one case alone, involving two former employees and the Whistleblower Protection Act, has cost the company almost $800,000 in legal bills. That's almost a million dollars, rather meaningful for a firm with a market cap near $40 million. (The firm seems to have won the case, at least.) This is a good reminder to pay attention to a company's legal wranglings, because they can not only sap a company of its cash reserves, but also drain management's time and attention.
  • Leder reported that Hewitt Associates (NYSE:HEW) filed an 8-K form granting 65,000 restricted shares to four company bigwigs and "change in control" severance agreements to some 24 executives. She notes that, "The agreements are fairly standard.... But they're probably worth paying attention to, since we've all seen this type of pattern -- expanding the number of folks covered by change in control agreements -- as an almost routine event when a company is prepping itself for a sale."
  • Newly public Huntsman Corp. (NYSE:HUN) is being generous with "tax gross-ups," which many investors may find distasteful. They happen when a company gives executives various perks -- the value of which is taxable. The firm then gives the executives funds to cover the tax impact. Does this seem like an excellent use of shareholder money? I didn't think so. Leder notes that, "President, CEO and Director Peter Huntsman received $789,000 in tax gross-ups in fiscal 2005."
  • Food giant ConAgra (NYSE:CAG) is apparently paying its outgoing Chairman and CEO Bruce Rohde some $50,000 per month (that's $600,000 per year) to "babysit" (as Leder puts it) incoming Chair Steven Goldstone. Rohde is also receiving stock options and restricted stock that vest immediately, as well as office space, secretarial support, and health insurance for him and his dependents. And this is for four years. Leder muses, "one would think that Goldstone is some novice in need of lots of hand-holding. But a closer look shows that Goldstone is not only the former Chairman and CEO of RJR Nabisco, but he's also been sitting on ConAgra's board since December 2003. Even more troubling for Con-Agra investors is why the company is rewarding Rohde for what can arguably be called a spotty track-record in the top spot." (Read about ConAgra's recent bittersweet quarter.)

You can learn a lot about a company by checking out the fine print in its reports. That's often where it tucks away information it would rather you didn't find.

If you'd rather stick to novels and let some smart stock analysts spend the time scouring financial filings for you, check out our investing newsletters. We cover dividend investing, small-cap stocks, rule-breaking companies, undervalued firms, outstanding mutual funds, and more. Our performance may impress you and best of all, you can try our newsletters for free.

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Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article.