Posts Tagged ‘quarterly report’

Sunday Special: Learning about a company through lawsuits

November 23, 2008

I’ve talked about using SEC reports, specifically 10-Ks and 10-Qs as guides to understanding a company’s litigation profile.  What kinds of suits?  How big a deal are they?

Today I’m focusing on what this litigation says about the company itself.   Numbers may tell stories about profits and successes and the website and news generally tell you what the company wants you to know  but lawsuits against a company tell you what they DON’T want you to know.

Here are four things to think about when looking at a company’s legal proceedings:

o   Does the company carry litigation costs associated with asbestos claims or other large scale mass tort actions?

 

o   Are they hit with lots of class action claims based on faulty products and/or services?

 

o   Are they subject to lots of suits claiming shoddy or unfair business practices?

 

o   Have they been subjected to significant securities litigation because shareholders are claiming the company knew about material facts that depressed their stock price and failed to disclose them?