SEC filings are the lifeblood of companies - they contain everything investors need to know to make informed decisions (unless the company illegally witholds the information!). Despite this, many investors ignore these filings and/or fail to realize how they can be used to profit. So, in the interest of creating more informed investors, here's a list of the five most important filings to watch:

1. Schedule 13D & 13G – This filing will let you know when a mutual fund, hedge fund or other entity acquires a 10% stake in a company. Often times when companies are undervalued, activist hedge funds will start acquiring a stake in the company in an effort to convince management to unlock shareholder value through a sale, special dividend, share buyback or other similar measures. Occasionally, these forms can also tip you off to potential acquirers purchasing a large amount of shares before making a tender offer for the remaining shares. Either way, these situations happen when huge shareholders are unhappy and want quick money - which presents great opportunities for those willing to tag along for the ride!
   
2. Form 3 & 4 – This filing is one made by directors, officers and 10% owners of the company. Insider buying – that is, when directors and officers purchase large amounts of shares – often occurs before a positive event for the company. For example, insiders may purchase many shares ahead of a blowout earnings announcement. These filings can also foreshadow other positive events, like potential takeover bids or other favorable events. Insiders know more than everyone else, so following their lead is usually a good idea!
   
3. Form 10-12B – This filing is the one for spin-offs – in particular, it details the spin-off terms and other company details. Spin-offs are very useful to watch because they typically outperform the market in their first year. This often happens because parent company shareholders usually are not interested in the spin-off and therefore dump their shares, which causes the stock to become undervalued. Watching these forms can tip you off to some great opportunities!
4. Form 8K – These filings are extremely important to watch because they detail material current events relating to the company. Whenever there is something worth announcing that cannot be classified in another form – this one is used. These things can include press releases, shareholder letters to management, litigation, SEC investigations, and other similar events. Many opportunities present themselves through these 8Ks!
5. Form 10K – This is the annual report for a company. Now, the numbers aren’t necessarily the most important part; instead, the notes at the end of this document occasionally contains the most interesting material. This can include future forecasts, status on litigation, future company plans or other material similar to that in the 8K. The information found in 10Ks can be extremely useful in coming up with a fair value for a stock!
   

It can be tedious to constantly check for new SEC filings via the SEC's EDGAR service, so I would recommend using a service like SECFilings.com to subscribe to free e-mail alerts when certain filings are made (they also have RSS and other options). You can setup alerts for companies you own, or companies in general, so you can always stay on top of the market!

Sara Lee Corp's (NYSE: SLE) spin-off of Hanesbrands, Inc. (NYSE:HBI) was completed today as the new company begins its first day of trading. Hanesbrands initial 10-12B filing with the SEC provides an overview of the new company:

"Although we are a newly independent company, our product portfolio includes some of the most recognized apparel essentials brands in the United States, including Hanes, Champion, Playtex, Bali, Just My Size, barely there and Wonderbra. We design, manufacture, source and sell a broad range of products such as t-shirts, bras, panties, men’s underwear, kids’ underwear, socks, hosiery, casualwear and activewear. In fiscal 2005, we generated $4.7 billion in net sales and $359.5 million in income from operations. Our mission is to create value for you, our stockholders, and for our customers through effective supply chain management, competitive prices, high quality and service excellence. Our strong brands and dedicated employees will drive this value."

Spin-offs outperform the overall market in most cases. This is because when shares are distributed to parent company shareholders, they often times immediately sell the shares, for a variety of reasons. This creates a windfall that ultimately results in a stock that is below its true value - which is a great buying opportunity for investors. Moreover, this company has a great, recognizable brand name, solid financials, and a great management team. Combined, these factors make HBI a stock worth watching.

Nabi Biopharmaceuticals (NDAQ:NABI) revealed in an amended 13D filing with the SEC today that activist hedge fund Third Point had contacted the company to make several demands. According to the filing, these demands included:

"(1) to investigate and, we believe, confirm that the members of the board of directors of the Company have engaged in gross mismanagement in managing the affairs of the Company, (2) to investigate and, we believe, confirm that such members breached, and are continuing to breach, their fiduciary duties to the Company and its stockholders, (3) to determine whether to conduct a proxy contest to replace the members of the board of directors and (4) to determine whether to commence litigation against such members for breaches of fiduciary duty, among other wrongs. These purposes are reasonably related to the Stockholders' interests as stockholders of the Company."

 These demands stem from years of mismanagement that led to the company's 50% haircut late last year and the continued dismal performance of NABI stock to date. The letter to management (attached to the filing) provides further reasoning behind the demands:

"The Stockholders believe that the board of directors of the Company has grossly mismanaged the affairs of the Company and has engaged, and is engaging, in breaches of fiduciary duty contrary to the interests of stockholders ... the Stockholders believe that the granting of stock options to certain members of management in February 2006 was deliberately and wrongfully timed to maximize the economic benefit to the option grantees and was contrary to the interests of stockholders. In addition, Stockholders believe that the directors have ignored, and are continuing to ignore, the will of the majority of the Company's stockholders, and are embarked on a scheme to entrench themselves in office for as long as possible and to maximize the personal financial benefits to themselves during their remaining tenure at the expense of the Company and its stockholders. The Company's board of directors has paid mere lip service to the interests and wishes of its stockholders, and has refused to engage in substantive dialogue concerning the gross mismanagement over which they have presided."

This is certainly an interesting development as investors are increasingly frustrated with the poor performance of the company. If Third Point can successfully obtain the information they desire it could lead to durastic measures, which could include a proxy battle and/or litigation against the company's management among other things. Either way, this is a great stock to keep on the radar as the situation develops.

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