How to read a 10-K without reading all of it.

A 10-K is a US company's annual report to regulators. It is long, dry, and — crucially — a legal document, which means management has strong incentives to be truthful in it in a way they do not on an earnings call. That makes it the single most honest document a company produces, and almost nobody reads it.

You don't need all of it. Here's the order:

1. Item 1 — Business. What the company actually does, in its own words. Read it once, properly. If it doesn't match the story you'd been told, that's the most useful twenty minutes you'll spend.
2. Item 1A — Risk Factors. Start here if you read nothing else. This is where the company is legally required to tell you what could go wrong. Yes, much of it is defensive boilerplate — but the specific, unusual, oddly-detailed risks are the real ones. Learn to spot the difference between "general economic conditions may affect us" (noise) and a risk described with uncomfortable precision (signal).
3. Item 7 — MD&A. Management's discussion of the results. This is where they explain why the numbers moved. Compare it against last year's version: the changes in language are frequently more informative than the numbers.
4. Item 8 — Financial statements, and the notes. The notes are where the interesting things live: revenue recognition, one-offs, related-party dealings, concentration of customers. Nobody reads the notes. Read the notes.

The three places bad news hides

• A segment that quietly disappears. Something broken out separately last year and folded into "other" this year is telling you something.
• Changed language in risk factors. A new risk added, or an existing one described in much more detail, is a deliberate act by lawyers who thought it necessary.
• Customer concentration in the notes. "One customer accounted for 19% of revenue" is a sentence that rarely makes the press release and frequently matters more than anything that did.