Podcast Summary: Masters in Business – "At The Money: Finding the Hidden Alpha in SEC Filings"

Host: Barry Ritholtz
Guest: Michelle Leder, founder of Footnoted and author of Financial Fine Print
Date: December 3, 2025

Episode Overview

This episode explores the opaque world of SEC filings and how buried disclosures can offer investors a significant informational edge—if they know where to look. Barry Ritholtz interviews Michelle Leder, an expert in dissecting the fine print of corporate filings, to discuss how companies communicate (and sometimes obscure) critical information. Together, they delve into the tricks management teams use, red flags to watch for, and the increasing role of AI in financial sleuthing.

Key Discussion Points & Insights

The Foundations of Disclosure (01:35–04:47)

• SEC Rules Are Old but Central: Disclosure rules date back to the 1933 Securities Act, forming the basis for modern corporate transparency, despite monumental market changes since then.
  • Michelle Leder: "That's the basic framework, if you will. Like the foundation of the house dates back to 1933, which is kind of amazing." (02:46)
• Types of Required Filings:
  • 10-Q: Quarterly report (three times per year)
  • 10-K: Annual report (once per year)
  • 8-K: Filed as needed for material events (not always accompanied by a press release)
  • Merger Proxies: Filed for major corporate events

Materiality and Managerial Discretion (04:47–08:28)

• Materiality Is Subjective: What gets disclosed often depends on management's judgment.
  • Michelle Leder: "Materiality is in the eye of the beholder. Something that might be material to me may not be material to you." (05:07)
• Disclosure Tactics: Firms sometimes delay or strategically time disclosures to minimize impact.
  • Example: Delaying a CEO resignation announcement until the maximum allowed period (often late Friday or before holidays), thereby reducing immediate market reaction.
  • Michelle Leder: "Companies waiting until late on a Friday or the Wednesday before Thanksgiving ... they can choose when they want to disclose." (07:53)

The "Non-Disclosure Disclosure" (09:29–10:21)

• Bare Minimum Disclosure: Companies often comply in letter but not in spirit, leaving out context and details that matter to investors.
  • Michelle Leder: "They might say, for example, 'Director Alan Smith resigned on a Friday,' but they don’t tell you ... maybe he was chairman of the audit committee, or any number of other information." (09:34)
• Investor Responsibility: It's up to investors to read between the lines, connect filings, and spot what’s being unsaid.

Metadata Red Flags & Early Warnings (10:21–11:50)

• Late or Amended Filings: Multiple late 10-K or 10-Q filings can be a harbinger of trouble.
  • Michelle Leder: "If that happens repeatedly ... that's pattern recognition ... that’s a potential problem." (10:48)
• Exceptions: Sometimes delays are due to complex events (e.g., major mergers), but often, persistent lateness is worrisome.

Footnotes Hiding Major Stories (11:50–13:36)

• Real-World Examples:
  • Zoetis: A footnoted risk about a drug in late 2024 flagged safety issues (seizures and deaths in dogs) that were publicly downplayed (12:06–12:33).
  • Nikola (2022): A seemingly minor resignation in a filing foreshadowed larger company issues and eventual bankruptcy.
    • Michelle Leder: "It seemed kind of unimportant, but then it turned out to be an early sign of basically rats abandoning the ship." (12:53)

Separating Signal from Legal Noise (13:36–14:58)

• Skill and Experience: After 20 years as a filings specialist, Leder trusts her "BS meter" to know what's normal CYA legalese vs. a red flag.
  • Michelle Leder: "There is a lot of CYA language in the filings and it can be problematic ... after 20 years of reading SEC filings ... my BS meter is pretty well defined." (13:51)

AI’s Role in Financial Analysis (14:58–16:40)

• Corporates Increasingly Use AI: Both to draft filings and script earnings calls.
• Analysts Use Specialized AI Tools: Michelle employs Fin Tool, software designed specifically to scan and synthesize SEC filings.
  • Michelle Leder: "There’s a tool that I’ve been using a lot lately called Fin Tool ... it’s strictly focused on SEC filings and financial disclosures and I find it to be pretty good." (15:35)
• Human Insight Remains Vital: AI is an aid, not a substitute, because context and patterns still require interpretation.

Closing Takeaway (16:40–17:27)

• Why Investors Should Care: Skimming only the headlines or press releases misses the real story—hidden (or just unpublicized) disclosures in regulatory filings can offer strategic trading advantage.
  • Barry Ritholtz: "There's gold in them thar hills, if you know where to look and if you know how to interpret it." (16:55)

Notable Quotes & Memorable Moments

• On Disclosure Rules:
  "The basic framework ... dates back to 1933, which is kind of amazing." — Michelle Leder (02:46)
• On Materiality:
  "Materiality is in the eye of the beholder." — Michelle Leder (05:07)
• On Disclosure Timing:
  "I've seen companies wait four days to disclose that, you know, and that's following the letter of the law." — Michelle Leder (07:53)
• On Non-disclosure Disclosures:
  "They’re giving you the bare minimum but not giving you anything more." — Michelle Leder (09:34)
• On Red Flags:
  "If [late filings] happen repeatedly ... that's pattern recognition." — Michelle Leder (10:48)
• On AI and Analysis:
  "AI is ... becoming much more common ... but ultimately it’s the lawyers that are signing off." — Michelle Leder (14:58)

Key Timestamps

• 01:35 – Introduction to the topic and guest
• 02:46 – Foundations of SEC disclosure rules
• 04:04 – Explanation of required SEC documents
• 05:07 – Defining materiality and its subjectivity
• 07:53 – Disclosure timing tricks
• 09:34 – The "non-disclosure disclosure" tactic
• 10:48 – Repeated late filings as red flags
• 12:06, 12:53 – Footnote examples leading to big stories
• 13:51 – Separating legalese from actionable red flags
• 15:35 – AI’s growing role in financial disclosure/analysis
• 16:40 – Final takeaways for investors

Summary

Michelle Leder offers listeners a behind-the-scenes look at how public companies manage the flow of information via SEC filings. Through concrete examples, she demonstrates that material information is often technically disclosed but intentionally obscured—requiring diligence and skepticism from investors. She illustrates how repeated tardiness, footnoted items, and subtle wording changes can serve as early warning signs for deeper issues. Leder also describes how technology, especially AI, is transforming both corporate behaviors and financial analysis—but vigilance and human expertise remain essential. The episode serves as a primer for trading and investing professionals interested in finding "hidden alpha" in places the market often overlooks.