I’ve been reviewing an iPad app called SEC Filings XRBL, which allows users to access digital copies of various SEC filings for companies. (XRBL refers to eXtensible Business Reporting Language, which is a standard way of exchanging business information in digital form.)
This app claims to have two purposes: (1) act as a central repository for all SEC filings in which an investor is interested, and (2) serve as a social media platform through which investors can opine about the content of these SEC filings.
On the first point, the app succeeds brilliantly. Its navigation is intuitive, it is responsive, and it has an annotation feature that allows you to make notes as you review, say, Apple’s (NASDAQ:AAPL) 8-K filing.
Where this app fails is in the notion of social media. The app’s designer assumes that the people most inclined to read SEC filings are willing to publicly share their opinions and notes about the material that companies present about themselves in public filings. This assumption seems erroneous, if only for the reason that the people most likely to review SEC filings are those fundamental investors who think that a particular company’s stock has been mis-priced by the market. (The perfect example of this would be those fundamental analysts who dug into Enron’s financial statements and started asking questions.) These are the very people for whom this app would be most useful, yet, at the same time, they are also the same people who most closely guard their opinions and analyses about stocks, in order that their mis-pricing is not eliminated by the market.
There is a reason that Whitney Tilson published a defense of his short position in Netflix (NASDAQ:NFLX) only after he established it: publishing that defense prior to having established the short position would have conveyed to the broader market his intentions. This would have made his short position rather ineffective. But profiting in the market requires some degree of information asymmetry: successful traders and investors rely on their ability to corral and use information that is not evident or available to everyone. (Note that this is not necessarily the same thing as using illegal insider information.)
The bottom line is that while this app is a great tool for an investor looking for an easy way to dig into companies’ SEC filings, but is not yet a social media tool in any meaningful sense.
About the author: David Friedman is the Editor-in-Chief of our sister site Wall St. Watchdog, which aims to bring back “truth, trust and transparency to Wall St.” Please take a moment to visit us, follow our Twitter feed, and join our Facebook fan page.