Fun with 10-Ks (I promise!)

We’re not quite at peak 10-K season yet. That will happen in a few weeks. Given how large the typical 10-K is and how they all seem to hit at the same time (it’s not uncommon, for example, for companies in the same industry, say ginormous banks like Bank of America and JP Morgan Chase to file their 10-Ks on the same day), really drilling in can be tricky.

But right now, things are still pretty quiet. So when KB Home filed their 10-K after 4 pm on Friday, I decided to take a quick look. One of the tricks I like to use when looking at a 10-K for a company that I’m not all that familiar with is to try to find what words the company repeatedly uses in the filing. Sentieo, which was acquired by AlphaSense last year, does a pretty good job at this, though I actually just did it myself this time around.

What I found was that for the 2022 10-K, the company used the words “interest rates” 50 times, or more than 2x the number of times it used the term in its 2021 10-K. In 2020, the term appeared just 18 times.

Remember: the 10-K is the company talking about itself in its own words in the 10-K, so figuring out what it is saying, or trying to say, makes sense.

One final note: I am planning to offer a course (yes, there will be a fee) on how to really read the 10-Ks that will be coming out in a few more weeks. If you are interested in learning more, please like this post or post a comment and I will provide more details once they become available.

This is the weekly free version of my Friday Night Dump newsletter, which highlights 6-10 filings made after 4 pm on Fridays, when companies tend to bury their most negative information. You can learn more about subscribing here.