A snapshot of this year’s disclosure avalanche …

July 11, 2011

file cabinets

Not quite two weeks ago, we passed the midpoint of 2011, marking a perfect opportunity to continue ignoring our New Year’s resolutions — and to check in on that marvel of modern investing, the Edgar database at the Securities and Exchange Commission.

Edgar, of course, is the SEC’s ever-growing trove of corporate disclosures — as it turns out, it stands for “Electronic Data-Gathering, Analysis, and Retrieval” — and needless to say, it’s near and dear to our hearts: Without it, we’d still be spending a lot of time mucking about with filing cabinets and getting paper-cuts. So early this year, we had our friends at Morningstar Document Research (ne⟠10-K Wizard) crunch some statistics from the 2010 filing year, and they’ve been kind enough to do the same for the first six months of this year.

Overall, no surprise, filings are up over the same period last year, by about 5%, to 375,909 in the first half of the year.

But the biggest filings are also getting bigger: While the top 20 filings in the first half of 2010 totaled 52,514 pages, the top 20 so far this year add up to 56,571 pages, an increase of just under 8%. And the most prolific filers are sending the SEC more documents: 16,412 of them from the top 20 companies, up 9% from the first half of 2010, when the figure was 15,028 filings. With that kind of growth, among other factors, you can imagine why Mary Schapiro wants a budget increase.

When it comes to counting filings from individual companies, the most prolific companies are financial firms, hands down. Both this year and last, BlackRock (BLK) made the most filings, at 2,368 (or roughly 18 for every weekday of the year so far, including holidays). It also held the top spot last year, with 2,313 filings. This year’s top-five were rounded out by Barclays (BCS), FMR (also known as Fidelity), Bank of America (BAC), and JP Morgan Chase (JPM); also in the top 10: Morgan Stanley (MS), Credit Suisse (CS), and of course, Goldman Sachs (GS). Last year’s list for the first half looked much the same, though we note that Goldman crept up to No. 10, at 669 pages, from No. 14 at 481 pages.

The only non-financial company to crack the Top 20 is International Speedway (ISCA), which operates famous race-tracks at Daytona and Talladega, among others. At $1.5 billion in market-cap, the company racked up a whopping 669 filings — or 455 documents for every $1 billion in market-cap. By contrast, despite its overall volume, BlackRock filed just 63 documents per $1 billion in market-cap. International Speedway has at least cut back a little: During the first half of last year, it churned out 867 filings. (This paragraph has been corrected from an earlier version. See below for details.)

Two other companies stand out among the most prolific filers: LendingClub Corp., with 780 filings, and Prosper Marketplace, with 443 filings. Neither are publicly traded, but both are in the same business: peer-to-peer lending, in which the companies match borrowers up with investors willing to front them what are typically relatively small sums. Neither company is huge in terms of lending power — LendingClub boasts of arranging just over $307 million in loans to date, a pittance compared to even some of the individual revolving credit agreements underwritten by a company like Wells Fargo. But because of the numbers of loans each company arranges, they have a lot of filings like this one from Prosper (which can make mildly interesting reading if you’re into that sort of thing).

Of course, number of filings is just one way to count volume — we also looked at the biggest filings by page-count and by file size.

Page-counts have swollen dramatically. Last year, the top two filings for the first half clocked in at a little over 3,500 pages — 3,763 for a 485BPOS from Janus Investment Fund, and 3,592 for an S-4/A from Allied Waste Industries (AW). By contrast, this year’s top page-count came from enzyme-maker Verenium (VRNM) (which sold its biofuels unit to BP last year), an amended 10-Q of 6,280 pages, and two other filings came in over 4,000 pages (a 10-Q from can-maker Novelis (NVL) and an S-4 from golf- and country-club operator ClubCorp Club Operations Inc.). We’ll let you slog through them yourselves to see if they’re worth the page-count.

Among the other big non-financial and non-real-estate companies making long filings with the SEC: solar-cell maker BrightSource Energy (which filed a 2,695-page S-1/A), cruise-line operator NCL (which filed for an IPO last fall, with two S-1/A filings totaling 5,109 pages), and Bluestem Brands (BSTM), once known as Fingerhut Direct Marketing, which specializes in selling all manner of gizmos and necessities to lower-income shoppers, with an S-1 weighing in at 2,123 pages.

Unlike the most prolific filers, which tend to be major financial firms, the bulkiest filings don’t always come from the biggest companies. In fact, quite the opposite, judging by file size — the number of megabytes of data taken up by the filing on the SEC’s computer systems. Tiny First Asia Holdings Ltd. (FAHLF), a Hong Kong nutritional-supplement company with a market-cap of $35.3 million, produced the biggest filing of the first half of 2011, with whopping 202-megabyte, graphics-heavy 8-K, followed by equally small Northport Network Systems (NNWS), with a market-cap of $35.7 million and a 10-K weighing in at 162 MB. None of the other standalone companies in the top 20 by file size boast market-caps over $100. (Most of the heftiest filings are from investment or separate-account trusts, including 11 separate filings over 85 MB from what appears to be the separate-account business of Jackson National Life Insurance.)

Given how often we chastise companies for saying too little, you might think these dramatic volumes would warm the cockles of our disclosure-loving hearts. Not so: A time-honored route to befuddling investors is to swamp them with vast amounts of boilerplate and useless information. Take one of those Jackson National documents, a prospectus filed on April 27: At 91 MB and 633 pages (not including more than 20 pages of exhibits), it would take more than 10 hours to read it at a page a minute — and we challenge the lawyers and accountants who wrote it to go through it that quickly and still make sense of what they wrote.

Meantime, it’s back to work for us — we have a lot of filings to sift through.

Update: I goofed — as M. Kucera points out in the comments, ISCA had a market-cap of $1.5 billion at the time of writing, not $1.5 million as we initially wrote. The comparison of market-cap to number of filings for both ISCA and BlackRock were more or less correct, but reflect filings per billion of market-cap, rather than per million. It’s fixed now. My apologies — I’ll mind my decimal places more carefully next time.)

Image source: redjar via Flickr

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