How To Read An Annual Report (10-K)

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In this video I explain how to read an annual report when analysing businesses. A key part of fundamental or long-term value investing is reading and interpreting SEC filings such as the 10-K. Here I break down which sections I focus on, how often I read annual reports and how you can thoroughly understand how a company works.
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Disclaimer:
The information in this video is general information only and should not be taken as constituting professional advice from Hamish Hodder.
Hamish Hodder is not a financial adviser. You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your unique circumstances.
Hamish Hodder is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by use of this video.

[@frankie_soprano]

1) Business 2) Risk Factors 3) Financial Data 4) Managements Discussions 5)Official Fiancial Statements 5.1) Notes to Financial Statements Good Vid, Thanks

[@nathantaylor3773]

Good comment.

[@dginvestor6483]

Thanks for sharing part of reading in annual report

[@nothingnothing3211]

Thanks for revision

[@nicab300]

@Yasuke ϟ Musa What is the difference bte Item 6 & 8? & What is Item 7 MD&A? Appreciate if u can help?

[@nahshonroche5060]

4.1 Long-term strategies 4.2 Key measures to evaluate sucess

[@john8909]

Yes I completely agree, the management discussion and analysis part is an extremely important area to focus on. It also led me to find out that 46% of a particular revenue stream was simply caused from the adoption of a new rule, where revenues would be recognized earlier.

[@BitcoinWillSaveUs]

Great high-level overview. It's good to review an annual report through different lenses too - as a customer, as an investor, as a current employee, as a future employee...

[@TysonHartnett]

Thank you! Buffett says he reads lots of annual reports and I’ve been doing that also...yet they have over 175 pages so keeping focused is important!

[@Katice634]

Thanks. Learned this during my mba program but I definitely needed a refresher since I want to start investing.

[@rustythrombosis5417]

The risk section of every 10-k I've ever encountered always read like it was written for 7 year olds. The warning "natural disasters can adversely affect business" is the equivalent of a waring label stating "may contain peanuts" on a container of peanut brittle.

[@gauravthadanii]

lmao i couldn't agree more with you here. they gotta answer in a more mature and detailed way and express their views and opinions clearly

[@MensahAcademics]

As a newbie investor this really helped give me laser focus when doing fundamental analysis. Very much appreciated.

[@PandemicGameplay]

I think notes to financial statements are very important considering their "definition" of something might change depending on the financial conditions at the time. This is especially true for banks or any regulated industry that might take a hit in a certain quarter due to certain environmental conditions. Otherwise, great video.

[@lawandalambert7932]

Thank you for the video. I am new to understanding these reports, and I am in a business class .

[@frankpowell29]

Thanks Hamish, I also believe the section on compensation for executives is very important.

[@arobbo3153]

hi frank, the compensation is important in what area are you meaning? id like to know what to look for if you could expand, thank you regards

[@john8909]

Interesting timing, I’m reading an entire annual report Rn! This seriously takes many hours especially when your new to it.

[@HamishHodder]

Keep at it! Once you get the hang of finding the important sections you will become much more efficient

[@11god87]

Thanks! I've been looking all over for a video like this

[@stoyanminev1714]

Hi, Hamish, nice video with good content and value, thank you. I’m glad you’re back ;)

[@HamishHodder]

Thanks for watching!

[@aarongatt6061]

Kindly educate us on how to calculate the average growth rate of a business for the next 10 Years or so. Cheers and keep em comin!

[@nathantaylor3773]

I second this

[@TheBigShredO]

You cant. It will always be an educated guess based off past growth rates

[@Hi-mb1rr]

@@TheBigShredO how do you find the last growth rates?

[@TheBigShredO]

@@Hi-mb1rr You can look at Revenue as a whole from each year annual reports or look at the businesses cash flow year to year. There’s a site called QuickFS that does this for you as well

[@petegriffo23]

Hi Hamish What a great video showing what you focus on when reading annual reports. You noted that you read the business section in detail to gain an understanding of how the business operates. Could you please do a video about what you use to gain an understanding of the industry in which the business operates? Look forward to many more great vids 👍🏻

[@HamishHodder]

Thanks for watching! I'll put it on my list

[@meriellehenry5088]

Thank You very much. You helped me in understanding my company’s 10-K Report. Great Information!

[@77magicbus]

Thanks. Do more of these so we can become more educated. Thanks

[@spaul5501]

As a 12yr old trying to learn about stocks some of it can be confusing but this video was extremely helpful thank you soo much

[@elyshawatson6801]

Love your content ! Keep it up. I think the back ground could be more visually appealing if you had some investing books, maybe a plant or if you have any of your own products. Just a thought! Keep up the great work. Love the podcast too 🙂

[@dong-kyukim6050]

Greetings from Korea. Thanks for a great video. Big fan.

[@karenstringfellow919]

Thank you Hamish, this video was super valuable and helpful.

[@temurteaches4811]

Thank you for a Very useful video, but I would also read the Corporate Governance and Executive compensation part too see if there are any conflicts of interest, if the business is being conducted in a fair way.

[@Blogdorf]

Warren Buffett went through the 10-K from Lehman Brothers in the middle of the night when he was asked for money. He annotated the report in the margins and said “no”. Reviewing his notes would be a great lesson in how he looks at a business. David Einhorn probably did the same. To be a fly on the wall of either would be fascinating.

[@filipmazur4763]

gold mine of value here I would say 10x to 20x formo read watch now type video. Really great thank you

[@psulionz87]

Good stuff - would love to see a deeper dive

[@zoro8727]

Nice one! Well explained

[@Cyberstreamerx]

Thank you for your video I learned a lot from this video and will start to read a few 10ks Nathan

[@brainstormer2520]

Nice video. It highlights the important parts of the intimidating 10K.

[@lipangmicky9027]

nice vid mate !

[@zhyarjalal4179]

What i understood through my whole study and searches that investing in public companies(stocks) is: step1-read and analyze company annual report. step2-check the intrinsic value of stock, is it undervalue 20% or more. if it’s, then don’t need to worry. Is there other thing that I will be need it to invest ...if yes, what is that?

[@kseag1194]

i enjoyed every bit of the video. it really is helpful. but i need to ask you where we could find the equity control relationship chart, the shareholding ratio of the company's largest shareholder, the control rights and ownership rights of the actual controller as well as the degree of separation in the annual report of any listed company. i am doing an assignment and i am lost. i couldn't find anything that could help.

[@pankajhindal9444]

Thank you brother It was really helpful for me It saved time and efforts 😊

[@stamatouvable]

I have the biggest problem of not knowing when to stop reading, when I don’t like something.

[@fennatthanaphop6623]

Thanks, Hamish. Good content.

[@edc614]

Good presentation - helpful. Thanks...

[@marianadavila323]

Great clear explanation!

[@HamishHodder]

Thanks!

[@moonlightnappeprs3108]

AMAZING VIDEO!!

[@liayoon4015]

thanks for sharing the insights!

[@pavlom4745]

Good content. Like. Though check you video on phone. I believe it looks good on large screen, but on small, the text line takes one half of screen and chars are too small.

[@wickedeyefilmz]

Thanks bro! Very informative!

[@nathantaylor3773]

Thankyou for the video.

[@kevinliang1775]

Thank you Mate! very informative!

[@nerycarrasco3862]

Thanks for this video!

[@Afteryouregone90]

Thank you so much 😭

[@zhyarjalal4179]

If I can’t ,or I don’t’ want to waste my time by analyzing or studying annual report , is there someone(employee ,accountant, financial unit or etc…) that I can pay it for analyzing and reading the report of company that I want to invest in?

[@jasontheone8406]

thanks for the information!

[@arturodanielgarciaaispuro7367]

This has been very helpful thank you so much!!

[@michaelnelson8174]

My first payroll job was bussing table at Texas Roadhouse 👍🏻

[@Kingfish214rs]

Thanks Hamish. Really enjoying your content. Are these sort of reports only available for companies on the US stock market? I can't find any of these reports for companies on ASX or NZX?

[@michaelschmidt5464]

Great to see what you are focusing on in an annual report. Thanks for sharing. Are AUS reports any different to US reports? For example regarding the required information shared from a company?

[@HamishHodder]

They vary slightly however for the most part they are the same as US annual reports

[@goodenoughmsawenkosidlamuk1458]

Thanks Hamish easily broken down into pieces that even someone without financial background can understand.

[@juansuarez3384]

@hamish hodder can you please make a video addressing the US repo market, QE and fed buying T bills? I'm not sure what to make of all this and raging market.

[@danhantack3051]

Great video. I’ve been looking at Texas Roadhouse lately. Love the restaurant and the numbers are great over the past 10 years. The numbers would suggest it, but I can’t put my finger on what their moat is. Have you read anything that suggests they have a big moat? Great channel.

[@uztrtrwhu3678]

Hello, How do I find the competitors of companies like Apple, how should I know which companies are direct competitors of Apple. It's not that difficult with Apple, but what about other smaller companies, how do I find them?

[@AviKhali]

Excellent content, thank you for this

[@dginvestor6483]

Hi im daniel from Philippines thank you for the nice video to help my investment strategy

[@thomassim5600]

Very helpful explanation, thanks

[@blassanchez2461]

Should I go from 2010 to 2019 when am I glancing over the last 10 years reports? Or is it better to go the opposite way, from 2019 to 2010 to have a better understanding?

[@gauravthadanii]

i have the same question as well.

[@christianwoods5850]

thanks for the explanation, very helpful!!!

[@ZafarAhmed-tr8bq]

Can u tell me about wacc with real balancsheet

[@ArvindBhave]

Extremely useful

[@nuevaeconomiatv1845]

Great, thanks!

[@udarpavarota396]

For a foreign company, where do you find the annual report?

[@emaillixinemaillixin8558]

Could you please explain how to read the financial statements of a real estate development company

[@AchillesAnew1]

Very helpful, thanks a lot!

[@tisaac2142]

Very helpful and interesting. Thanks.

[@Idiophones]

What happens if wrongly filled or not filled? Like Agrify

[@tienvdoan]

Could you do vertical, horizontal, trend analysis on 10k report? Thank you

[@k.6072]

This was extremely informative and clear. Thank you.

[@glensmalll]

Do you use formulas such as an Altman Z score or other formulas?

[@mamotivated]

Nice job sir

[@25MedCom]

I have that same shirt. Nice 👍🏼. Also, good video!

[@tienvdoan]

Should I choose big or small company to analyze? Big company has more data? would give you more info to analyze?

[@lkeith88]

Start with smaller companies in an industry you can get your head around. Check out SGC for example. Pretty straightforward company.

[@jesusruiz523]

You are a crack bro, thanks!!

[@evocars4530]

do you have a spreadsheet?

[@nicab300]

Thank you. How do you calculate "Change in Working Capital" in Cash Flow Statement? Appreciate if u can explain.

[@atulsoni70]

Thanks for sharing it

[@joachimmajgaard9929]

Hi there. Thanks for the videos! Im trying to do a analyse for MCDonalds, and trying to find out something about the land they own, the value of it. Can you please guide me where to find such information?

[@vishmm895]

I would look at their long lived assets and related schedules, usually going in notes to the financial statement

[@ameliaradford2861]

Poor people think of what they can buy with their money, Rich people thinks of what they can invest in with their money 💰💰💰

[@achesekoko4341]

The rich stay rich by investing and investing without stopping then the poor stay poor by spending like the Rich but yet not investing like the rich

[@robertgeorge2603]

Investing is a stepping stone to success, investing is what create wealth.

[@lilianashley9990]

Recently, I invested in both stock and Crypto but currently I believe crypto is doing more better !!

[@maryjames9189]

The best thing to do in this period is to invest in silver and crypto

[@charlotteava8967]

The rich become richer by spending like the poor and investing None stop, While the poor stay poor by spending like the rich yet not making any investment

[@born2beng]

How can i find 1)Cost of equity? 2) interest rates for such company? (Tried in annual report but some are not clear, any easy way?)

[@born2beng]

And 3) Discount Rate

[@mohdziabarati4649]

Can you make a video about reading quarterly reports

[@johnc8627]

Good job

[@Go4Yourz]

The Risk factor section does change over time.

[@Silver_Sponge_Kalamunda]

Thats great..

[@businessman1060]

Doesn't annual reports have a guidance or expectations of the future section?

[@crisg.5766]

Hey Hamish, not sure if this was intentional, but your thumbnail graphic for this video appears is missing the word "Read"

[@HamishHodder]

It was intentional :)

[@AG-dv7uy]

Hi, I am wondering, when analyzing a company should you also look at the Registration Statement, 10-Q, 8-K, Proxy statement and so on? Thank you!

[@lkeith88]

I would definitely suggest reading the co 10q to see if they're executing on their strategies, if any new headwinds crop up that may be material to earnings, etc etc.

[@heyme156]

Where do you check how many shares has the CEO in your company?🙏

[@mr.kapasi1513]

It is there brother In annual report..

[@niranjan3968]

grandmaster ⬇️🥺 1 vs 4 love you 10.K target ❤#freefire#short #sports

[@hiphop2005233]

What about annual reports of foreign companies ?

[@Buddwh1001]

Nice video Hamish good value as always.

[@pisanghangus2]

thanks

[@dylankelly8499]

i fw texas roadhouse

[@subscribetomyyoutubechanne1543]

Are 8k important what you guys think?

[@HamishHodder]

Yes!

[@aaronkaatz763]

Annual report

[@AlainMarleyB]

🔥🔥

[@MikhailGoncharov-tl4cr]

great

[@user-cx1pl7jc8m]

thanks man! QQ: how can you understand in which month the "cash obligations" are due, since iy just tell for the whole year ?

[@bilalsharif3063]

What is the use of reading a 10k report,what is it that you can say to argue that reading the balance sheet and financial statements are more important than reading a 10k report, because essentially the numbers tell it all.

[@Aaron-xn7dg]

I hate when the 10K is filled with a bunch of jargon for no reason

[@isrhazan7896]

I luv u