Researching a company

It's the first step in evaluating a stock issue for inclusion in your portfolio.

By Russ Kratowicz

Your tax money at work

Our hired hands in Washington working at the U.S. Security and Exchange Commission seem to be doing a good job keeping track of financial data for us. If you cannot travel to Washington on a junket, then check out http://sec.gov/, the home of our good friend EDGAR, the Electronic Data Gathering, Analysis, and Retrieval system. Companies and others are required to file some documents with the SEC electronically. Good ol' EDGAR collects, validates, indexes, accepts, and forwards those documents required to be filed electronically.

One of the pages in this Web site is the Guide to Corporate Filings, a short description of the documents in question. In the EDGAR database you will find corporate annual reports, registration forms for stock brokers, and much more than can be listed here. You can learn, among other things, who has beneficial ownership of certain registered equity securities. Another part of the database covers mutual funds and their filings. Digging in the database will unearth a Form 10Q and Form 10K, the quarterly and annual report respectively, that corporations must file. You can find a corporation's prospectus. Overall, there is a lot of material here for you to examine.

EDGAR is equipped with rather decent, but not necessarily user-friendly, search engines that help you locate the material you seek. Of course, there is a learning curve involved, but you will quickly get the hang of it. Most of the searches are on the basis of the company name or stock ticker symbol.

Be forewarned, however. Before you start downloading material from EDGAR, be sure to refill the paper tray on your printer. You are going to be seeing an awful lot of copy come out of the download and print exercise.

Executive compensation

The details about the compensation paid to the upper management of a corporation has been required to be published in proxy statements for some time. Proxy statements are SEC requirements, therefore EDGAR about this issue as well. So, when you search out this information, give EDGAR the code for a proxy filing (DEF 14A) and the name of a corporation. Then it is simply a matter of scanning the proxy statement for the executive salary information.

Stock price performance

If you will be so kind as to point your browser to http://lainet3.lainet.com/~eddyv/index.htm, you will get to the Analyst's Grotto. The developer of this site, Eddy Vasile, originally collected the information for his own use. If you use his site, be aware of Eddy's disclaimer about using it at your own risk.

Among the financial information to be found here is the 1996 stock price performance, dividend, earnigs per share, price-to-earnings ratio, yields, and the industry for all 500 of the S&P group. The data is available in two forms--a zipped Excel file you can download and an on-line version. You can also get the data for 1Q97.

Furthermore, you will find the non-weighted average stock price appreciation by industry. For example, computer (peripheral) stock appreciation, on average, was over +90 percent for calendar 96 while that for managed health care was almost -31 percent. Which market segments are you using for your portfolio? What market segments does your mutual fund use?

Wall Street Research Net

This column favors content Web sites over promotional Web sites. However, Wall Street Research Net is a promotional site that has great content. Go to http://www.wsrn.com/. This net consists of over 19,000 links to help investors perform fundamental research on actively traded companies and mutual funds. This site allows you to research companies, the economy, the markets, brokers and services, and more.

Click on Researching a Company and the next screen you see has the alphabet strung across your field of vision. Then, when you click on a letter corresponding to the name of the company you are researching, the search engine delivers an appropriate linked list of possible candidate companies. Now, you click on the name of the company and you receive another linked list of research, reports, and summaries; corporate news; value added links; graphs and charts; and company links. Very quickly you will find yourself several levels deep into this comprehensive Web site. At this point, you can, for example, click on News Search and get another screen that lists magazines, newspapers, and on-line links that take you closer still to the information you seek.

Ohio to the rescue

Tim Opler, a volunteer, maintains Finance from the WWW Virtual Library, a content site brought to you by the kind folks at Ohio State University. Check out his handiwork at http://www.cob.ohio-state.edu/dept/fin/overvw.htm. This page is organized with links for investors, students, and researchers. Tim covers topics like financial markets, corporate financial management, trading strategies and procedures, and more.

Here you can get prices for securities, something called Free Investment Advice for Couch Potatoes, financial data, and a listing of sites of interest to researchers, students, executives, bankers, and educators.

But, what if you are a detective trying to get the lowdown on investment information? Well, Tim has a section in the Web site called The Detectives Guide to Financial Information. Pretty convenient, no? The guide has three levels. The highest level organizes Web resources by major topics like country, industry, and type of information. The second level gives the topics of level one plus links to individual Web sources.

Level three, the most detailed, discusses the content of the various sites. The third level is large, as you would probably imagine. It is broken into two sections--A through M and N through Z.

Odds and ends

Wall Street Access at http://www.wsaccess.com is a good Web site to have in your back pocket when you do fundamental research on individual issues of securities. You can get current quotes including price/change, bid/asked, high/low, and volume data by entering the stock ticker symbol for the security. What? You don't know the ticker symbol. Okay, use the symbol lookup feature. Enter the name of the company and you get the ticker symbol in return. Go back and enter that and you get the quote data. Then you can click on the Charts option to get graphs of the price (100-day moving average), the daily high/low/close, and the daily trading volume. If that is not enough, then you can click on the Reports option to link to ol' EDGAR and other references to reported data about the stock issue.

Playing the stock market is an inherently risky proposition. If it had no risk, it would have no reward over that of a plain vanilla savings account at the local bank. You won't get rich depending on savings accounts. You won't get rich working for someone else, either.

Remember, we search the Web so you don't have to. Take you fate in your own hands and at least dabble in the market on the basis of factual information, not guesses. If nothing else, you will have some good financial yarns to spin. Happy investing to all and to all a good night.

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