Fundamental investing has always been about research. While research can be helpful for uncovering investment opportunities, its value is often greater for avoiding horrible mistakes. When I was in the text analytics space, a Tier I investment bank looked to engage us to read through 10K and 10Q filings to identify potential litigation risks such as asbestos litigation. It turned out that their analysts never bothered to read the filings and they’d been burned with two 7-figure losses in their fixed income group as a result.
It’s not a lot of fun reading the Ks and Qs and that’s why I’m thankful that Michelle Leder and the team at Footnoted.org does some of that work for the rest of us. Each day, Footnoted.org identifies some of the unique and interesting elements that companies look to bury in the fine print of the footnotes in their filings. Some of what they find is shocking and egregious, some ironic and some is simply laugh-out-loud funny.
Recent posts have uncovered the $10 million “go away” fee that InfoGroup (IUSA) is paying former CEO Vin Gupta, which more than offsets his $9 million settlement, netting $1 million for his bad behavior; as well as the $2 million annual fee Martha Stewart Omnimedia (MSO) is paying its namesake founder each year for use of her various homes for filming (hey, I wonder how much the McCains could get for use of their 8+ properties..).
Regular readers of Footnoted.org have followed the trail of the Countrywide Financial Internet sex party house, which recently sold for less than half the $1.1 million mortgage that Countrywide gave to the Florida swingers who financed it.
At year-end, Footnoted.org allowed its readers to vote on the dumbest footnote of the year. The winner, with nearly 60% of the vote, was Qwest allowing the daughter of its CEO to use the corporate jet to commute to high school.
In many ways we have more transparency in the financial markets than we ever did. But all that disclosure is useless if no one is reading the filings. Thankfully, we have the Footnoted.org team to read them on our behalf and highlight the bizarre ones for our pleasure.
The Ten Best Financial Blogs:
10. 24/7 Wall Street
9. The Big Picture
8. Dealbreaker
7. Footnoted.org
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