finance
October 24, 2007 5:17 AM   Subscribe

What kind of information am I entitled to when I buy shares of a company?

If I buy a share of a company with a broker such as E-trade do I get more information than I would if I was just researching whether or not I should invest in them? The reason I ask is because I am looking to learn more about certain types of companies. I want to be able to look at a balance sheet and income statement of a company and know where all their revenues came from, and basically just figure out how these companies make money, how they're financed, etc.
posted by amsterdam63 to Work & Money (9 answers total) 1 user marked this as a favorite
 
Zero. All information that public companies provide their shareholders is available to anyone. You can get the information on the SEC's website and (in most cases) from the "investor relations" subsite of the company's own website. ("Investor relations" is often a linke from the "About" page rather than the homepage.)
posted by MattD at 5:29 AM on October 24, 2007


If I buy a share of a company with a broker...do I get more information?

Nope. All listed companies must publish their Reports and Accounts and make them available to anyone who wants a copy. Most are usually published online as well and can be found, as MattD said, in a dedicated 'Investor Relations' section.

If you're lazy and willing to pay, there are specialist companies who carry out in-depth research of other companies and report back to you. But even then, all the information they gather will be in the public domain already.
posted by Nugget at 5:40 AM on October 24, 2007


You don't need to be a shareholder to do this, but I recommend listening in on quarterly earnings calls. It helps flesh out the rather dry information submitted in public filings. These are often broadcast over the web--but you can call the Investor Relations department and ask for the dial-in information too.

And there's no reason you can't call Investor Relations and ask whatever questions you want. They will probably just refer you to their filings, but sometimes people get lucky (not lucky in the sense of a good insider tip that you can use to trade--but perhaps someone will explain a portion of the business to you in a way that doesn't reveal non-public information but gives you a fresh or new perspective). Be professional and polite, of course.
posted by mullacc at 6:08 AM on October 24, 2007


Giving anyone special information, stockholder or not, is against the law. Prison time, massive fines. It's called "inside trading" and the SEC takes an extremely dim view of it.
posted by Steven C. Den Beste at 7:41 AM on October 24, 2007


And there's no reason you can't call Investor Relations and ask whatever questions you want. They will probably just refer you to their filings, but sometimes people get lucky (not lucky in the sense of a good insider tip that you can use to trade--but perhaps someone will explain a portion of the business to you in a way that doesn't reveal non-public information but gives you a fresh or new perspective). Be professional and polite, of course.

And once you learn the difference between a smart question and a stupid question, you can tell IR that you run a hedge fund, and they'll spend more time and effort trying to help you answer your questions.
posted by Kwantsar at 8:37 AM on October 24, 2007


SEC rules require the disclosure of damn near everything pertinent these days, at least from the perspective of an individual investor.

The only informational rights a shareholder gets that the general public doesn't effectively have comes in a few very specific things, such as the right to demand an inspection of corporate books and records, and the right to get a list of shareholders. (This is under Delaware law, which governs most US companies. It's the case in most other US jurisdictions, which follow the model rules to some extent.)

The only reason you'd generally want that stuff is if you're gearing up to file a derivative lawsuit or something against the company.

So yes, long story short, you don't get any more info, for all practical purposes, as a shareholder.
posted by theoddball at 8:55 AM on October 24, 2007


Reg FD prohibits anyone from getting information that someone else can't get; not only that, all new information has to come out in the form of a press release.

So no, buying shares can't entitle you to special information, nor does anything else you could do.
posted by ikkyu2 at 9:01 AM on October 24, 2007


Well, I think people are getting a bit silly in this thread, now that I re-read it.

So let's take it back a notch and look at the questions:

1. What kind of information am I entitled to when I buy shares of a company?

Essentially, you are not entitled to any special disclosures. You get only what the remaining 99.99% of the world gets. Broadly, these are:
a. Annual and interim reports, which contain five key things:
1. cash flow statement
2. balance sheet
3. income statement
4. statement of other comprehensive income, and
5. management's discussion and analysis
b. The Proxy Statement (called a 14A), which contains:
1. A lot of the nitty-gritty details of the business, like executive comp
c. Webcasts and investor presentations, which are the best way to get to know a business in a less-technical, less-financial sense, and
d. Any other press releases, which the company issues just about any time something material happens (called an 8-K).

If I buy a share of a company with a broker such as E-trade do I get more information than I would if I was just researching whether or not I should invest in them?

Not really. If you held a big, big, big position, you would be an insider, and you would get access to the sort of things insiders get access to-- but this is a) irrelevant to your question, and b) very complicated from a legal and regulatory standpoint.

The reason I ask is because I am looking to learn more about certain types of companies. I want to be able to look at a balance sheet and income statement of a company and know where all their revenues came from, and basically just figure out how these companies make money, how they're financed, etc.

As I (sort of) wrote before, what you are looking for is public information, available for any firm that trades on an exchange (local securities laws are not completely uniform, of course, please stuff it, pedants).

If you are just looking for a basic understanding of the company, start with the presentations, move to the interim and annual reports, and finish with the proxy. If you then have additional questions, call IR at the firm you are researching. Because you are not an institutional investor, IR will not break its ass trying to help you. There is nothing illegal about this. As mullacc wrote, if you are polite and kind, 99% of IRs will try to make at least a token attempt at answering your questions. Whether you own zero or ten or a hundred shares is irrelevant.

And ikkyu2 is technically correct, and SCDB is almost technically correct, but as a practical matter there are many fine lines between what is material and what is not. The line of discussion there exceeds the scope of your question--if you're really interested in that, wait a week, post the question, and I will explain it to you.
posted by Kwantsar at 10:23 AM on October 24, 2007


Also, the answer to this question:

If I buy a share of a company with a broker such as E-trade do I get more information than I would if I was just researching whether or not I should invest in them?


is "sort of." You don't get any special disclosures, but maybe they send you a bound annual report via snail mail (which you could request anyways, whether or not you hold the shares), rather than "forcing" you to download it.
posted by Kwantsar at 10:40 AM on October 24, 2007


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