AI driven 10Q / 10K text analysis
Since there are always reasons when companies change the wording in their financial filings, being alerted to these changes allows investors to realise potential risk factors and opportunities before they are reflected in the market, ideal for idea generation and portfolio monitoring. Recent alerts include: 1) Broadcom - VMware concerns re. the loss of “significant” customers. 2) Avnet - more benign competitive environment. 3) Guidewire Software - may need to reduce prices or change pricing model. 4) Hewlett Packard Enterprise - more positive on near term growth.
Rapidly detecting meaningful language changes in 10Qs / 10Ks
Analysis of the data and subsequent insights are driven by AI, NLP, data analytics and qualitative analyst oversight. Recent examples:
New Relic (NEWR) - Added the following wording to its 1Q23 10Q, “Businesses may look to rationalise their spending in response to such factors, which may impact our sales and renewal rates and negatively impact our business”.
Broadridge Financial Solutions (BR) - Added to its 2022 10K, “And the loss of any of such clients could have a material impact on our revenues and also result in an asset write-down of our client onboarding costs”.
Avnet (AVT) - Clear concerns re. cancellations, inventory and pricing.
Advanced Micro Devices (AMD) - Minor amendment to its 2Q 2022 10Q suggests they are more positive on cash flows.
