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How Investment Analysts Spot Critical Changes In SEC Filings

By Jan SvendaApril 24, 2019

One way I think about AlphseSense and its AI platform is that it is a place for me to minimize risks when doing equity research. There is no room for error when trying to understand a business, and AlphaSense delivers this through several features.

One of the crucial ones for me is the Blackline feature. Blackline allows you to compare a 10K or 10Q with filings from the previous fiscal period. This lets you see what the company decided to adjust, add or remove, so you can catch any important changes the management might not otherwise mention in press releases or conference calls.

As straightforward as this sounds, I can’t stress the utility of this. Even the slightest change of tone could severely impact your investment thesis. By using Blackline, you will be able to catch these changes, be it in accounting language, legal situations, or general risk factors.

One recent example is Teladoc (TDOC). This telemedicine company is going through a review of their NCQA certification, an important healthcare certification. In their last 10K filed in February 2019, they have suddenly dropped all language regarding this certification, as can be seen below:

The change in disclosure could potentially mean they are running into delays or might not even receive the certification again. This could have a material impact on the company. It could signal potential red flags connected to corporate governance.

Anyone interested in the company should know about that small, yet crucial detail. Yet without Blackline, investors and analysts are unlikely to catch this change. The certification was only mentioned at two places in the 10K. Unless you would specifically look for it, you wouldn’t find it.

The bottom line

Having this feature on the AlphaSense platform also brings several other advantages. For example, it's not the first time I'm looking at the company, I can go straight to Blackline in AlphaSense. I'm then able to read the whole relevant filing on the platform, while also checking and comparing the changes -- ultimately saving time. I can also annotate and keep my internal notes right within the platform, keeping all my documents in a convenient location.

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About the Author
  • Jan Svenda

    Jan Svenda

    Jan Svenda is an independent equity analyst focused on the U.S. Small/Micro-cap space. He searches for long ideas trading around Net Current Assets Value (NCAV) and for short ideas which showcase a significant potential for aggressive or manipulative accounting.

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