This is the time when annual reports fill up your mailboxes. Almost all of them wind up in the waste basket without being read, the ballots along with them. This is a mistake. I say this not because I wrote more than 30 of them, but because they say so much about the company and its business, probably more of value than you will find anywhere else. Long gone are the days when the CEO simply boasted about being "well positioned for the future" - and little else. Today, the company lawyers and accountants sweat over every word, making sure that every syllable is accurate to a fault. We live in the age of transparency - and lawsuits.
So, the next time you receive an annual report, junk the ballot if you must, but read the President's letter, and read every word of what is said about the organizational changes, the competitive landscape, and especially the profit and loss statement and balance sheet, comparing them with the year-earlier numbers. If you have time, you might scan the biographies of the nominees for the directors, but these are not essential, nor are the compensation tables. The state of business is what you should be most interested in, and you should be able to get a clear picture of this with less than a hour's reading. It helps if the company is in a business you know something about (e.g., retail food or clothing).
If your portfolio is not worth an hour of your time, you should put your money in the bank or in good mutual funds, and leave the reading to professional analysts.
