SEC Filings are crucial to maintain a fair and transparent stock market. These filings can contain extremely valuable information about publicly traded companies and can be used to get an edge in the market. The problem is most retail investors don't understand or take the time to read SEC filings. Thankfully, there are several tools available to help investors view, understand, and draw valuable insights from SEC filings. We will highlight these tools and touch on how Natural language Process (NLP) is making it easier for retail investors.
EDGAR, the Electronic Data Gathering, Analysis, and Retrieval system, is the primary system for companies and others submitting documents under the Securities Act of 1933, the Securities Exchange Act of 1934, the Trust Indenture Act of 1939, and the Investment Company Act of 1940.
EDGAR alone processes about 3,000 SEC filings per day, serves up 3,000 terabytes of data to the public annually, and accommodates 40,000 new filers per year on average, meaning that any investor, even institutional, must clearly choose specific companies to follow for sheer lack of resources. If you want to know more about EGDAR and SEC Filings, check out their site.
That's a lot of data - especially for a retail investor. I know it is overwhelming, but we will get into why it can be a goldmine if you know where to look. The problem is that most of these filings contain language that is tough to understand, or are 10s of pages long and brutal to read. We will get into solutions that exist to make finding great investment insights easier as a retail investor.
There are several different filing types, each serving a purpose. For simplicity we will use the SEC Form 8-k as an example.
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 Securities and Exchange Commission (SEC). Also known as a Form 8K, the report notifies the public of events, including acquisitions, bankruptcy, the resignation of directors, or changes in the fiscal year.
Why is this important? Well, it tells investors of important information that will likely have a impact on the business and therefore the price of the stock. This information, if received and parsed in a timely manner, can be used to trade or investment in a stock. There is also the sentiment within the sec filings that need to be considered, since sentiment plays a vital role in the price of a stock.
The market for NLPs for SEC filings is pretty scattered with tools that do basic search, analysis, and data pulls. EDGAR incorporates tools that enable users to take advantage of the information. Below are 5 solutions that are used to help investors identify insights from SEC filings.
Utradea Uses natural language process to extract key words and phrases from SEC filings. Utradea's SEC Dashboard provides an easy-to-read format of the SEC filing. The Smart Parser extracts key words and phrases within the SEC filing to quickly provide investors with insights. The SEC Dashboard tool is free to use for registered users.
MLQ uses textual analysis of 10-K & 10-Qs to identify the type of language used in the filing, for example, if it contains litigious language, constraining language, and so on. This research studies the similarity of language used in the filings using data which enables to analyze what type of language is similar. MLQ requires investors to contact them for access to the solution.
Accern's SEC 10K and 10Q dataset extract key information and events related to financial performance, compliance, litigation, corporate activities, product development, governance changes, and more from all sections of the filing. These signals are the only commercially available dataset constructed using natural language processing techniques, powered by Accern AI Platform. Contact for pricing.
Acuity Knowledge Partners is a platform that consolidates country financial and regulatory filings, tracks company filings and gives alerts, allows for sharing of content, provides research and analytical tools such as financial benchmarks, and download the data. Contact for pricing
Scanz allows user to scan SEC filings for key words, set alerts, see resulting change in trading volume on SEC news. It does not provide a summary of the filings. The base feature is free to use.
SEC filings contain a wealth of valuable information for retail investors - if you know where to look. This process has been made easy with a number of automate NLP tools used to extract investment insights. Utradea built a proprietary SEC NLP Dashboard to help retail investors quickly find investment insights. Starting with SEC Form 8k, and expanding to SEC 10k filings, the SEC NLP Dashboard continues to evolve into the ultimate SEC NLP solution.