Sentieo’s industry-leading Document Search has had SEC filings redlining (also known as “blacklining”) for years. It lets users compare any two SEC filings in several ways: all changes, just the inserts, or just the numbers. We also have productivity enhancers, like “hover overs” that show the old vs. new text side-by-side, or “most logical” documents to redline against (like the prior 10-Q or the “same” 10-Q YoY).
Redlining to spot changes is essential for anyone reading filings, including equity analysts, SEC reporting teams, securities regulators, comp intel professionals, as well as financial journalists (i.e., see our redlining in action in the Financial Times, looking at the changes in Tesla’s 10-K, filed earlier this year).
But redlining is also inherently limiting because it compares only two documents: until now. With Sentieo’s newly-released Section Redlining (accessible both in the Menu dropdowns and in the classic Redlining in-doc menu), users can now compare changes, on one screen, in document sections for:
- Single companies across time
- Multiple companies and watchlists, based on the latest filings
This new function will save users time as changes, by section, can now be spotted in a second. Users can also see the trends in disclosures over the years (i.e., is there more language in the Litigation section?). This means less time looking for where the changes are, and more time reading to assess their materiality.
The navigation allows for “side by side” readings of “old” vs “new” vs. “changes” in the same panel. And, in more detail, the shading of the cell indicates more (darker) vs fewer (lighter) changes, while the number indicates the net change in words in the section. The 10-Qs are compared against the prior 10-Q, and the 10-Ks are compared against the prior 10-K.
Let’s look at some examples.
This is a single-company view for Pilgrim’s Pride (NYSE:PPC), a poultry producer. We can see very consistent increases over time in both the Risk Factors and the Legal Proceedings. And for a good reason: the US poultry industry has been involved in multiple litigation proceedings regarding an alleged price-fixing cartel. Logically, we would expect to see exactly these disclosures grow over time. PPC just settled with the DOJ last week, and its then-current CEO was indicted in June, while the prior CEO was indicted in October. Further, PPC’s controlling shareholders were fined over a quarter billion dollars for FCPA violations in Brazil by both the DOJ and the SEC. Hopefully, with the worst behind the company, we will see these sections shrink in the future.
Now that we have spotted the 48% increase in Risk Factors language in the Q2 2020 10-Q filing, we can just click on the cell to read what was added.
We can easily see that there was a whole new Risk Factor added quarter-over-quarter regarding legal proceedings, including the indictment of the then-CEO.
We can also read whole sections, across 10-Qs and 10-Ks, on a side-by-side basis.
We can compare changes in the latest filings between companies as well. Here we are looking at the latest from PPC vs Sanderson Farms (Nasdaq SAFM), another poultry company. We can see that the Legal Proceedings section there has expanded as well.
We can see what happened with SAFM just like we showed with PPC above, but we can also see the Legal Proceedings section of PPC and SAFM side-by-side. This is particularly useful in this case, as both companies are defendants in many of the same proceedings.
Another interesting thing that we spotted while using the new function was when we compared Home Depot (NYSE:HD) to Lowe’s (NYSE:LOW). We spotted right away that the normally “sleepy” Controls and Procedures section had a big update from HD.
Clicking on that cell, we read that, due to COVID, HD suspended temporarily physical inventory counts, and is using modeling instead.
Finally, we can compare the changes in the latest filings for entire watchlists. All that Sentieo users need to do is enter the name of their watchlist, and then see the comparisons.
Here we are bringing in the six S&P 500 Household and Personal Care stocks: Estee Lauder, Clorox, P&G, Church and Dwight, Colgate, and Kimberly Clark.
One thing that we can spot right away is that three out of the six have a June FYE: this is why we are seeing the 10-Ks as the most recent K/Q filing.
The navigation here is the same as the prior example with the two companies.
In this four-minute video below, we go over the examples “live” to demonstrate the navigation and speed of the new feature.
If you’d like to see how the Sentieo platform can help you and your colleagues can expedite peer and sector research, contact us to set up a free trial.