BEGINNERS’ GUIDE TO SEDI & SEDAR FOR PROSPECT RESEARCH

Issue 43 March 2014

By Jana Wilde, Prospect Research Analyst, University of Calgary

All publicly-traded Canadian companies are required to file a broad range of information about their company and its insiders. These fillings are available to the public on SEDI.ca and SEDAR.com and are very helpful in prospect research.

SEDI (System for Electronic Disclosure by Insiders) tracks stock trades made by company insiders (including directors, officers and shareholders with over 10% of outstanding shares) and gives the public access information about insiders’ ownership of securities (i.e. stocks, options, warrants, etc). Information can be sorted by company, individual, date or class of security and is available as far back as 2003.

Mechanics of Pulling a SEDI Report

Go to www.sedi.ca.
Select your language of choice.
Select “Access public filings” in the upper left hand corner.
Select “View summary reports”.
Select “Insider transaction detail”.
Enter the individual’s surname and choose “Insider family name” from the drop down box on the right.
Enter the individual’s given name, or leave it blank.
Select either “Date of transaction” or “Date of filing” and select the date range from the drop down boxes.
Leave the optional criteria blank as the report will pull everything. However, you can specify that you only want to see common shares.
Click on search.
Select “View” on the left hand side of the individual’s listing.

SEDAR (System for Electronic Document Analysis and Retrieval) is Canada’s securities filing system for annual reports, quarterly reports, annual reports, news announcements and all other forms of required reporting. It is an archive of information about public companies and mutual funds dating back to 1997. Searches can be conducted alphabetically or by industry categories. The files are primarily in PDF format – though early filings may be in WP 5.1.

How Can SEDI and SEDAR Inform Research?

By gleaning information about a prospect’s stock holdings in SEDI, a researcher can calculate the value of a prospect’s holdings in public companies where they are insiders. This is not a complete picture of an individual’s wealth, but an indicator.

An individual’s SEDI report lists all their transactions first by issuer (the company), then by the type of security (common shares, options, warrants, etc), and finally in chronological order.

The report keeps a running tally of the individual’s balance for each type of security. Each security designation will list a transaction and will specify if the individual controls the security directly or indirectly.

TIP: Shares that are held indirectly can provide some interesting leads. These shares can be held by companies that they individual owns and can provide clues about other assets. They can also be held by a spouse, a child, another family member, a charitable foundation, or in RRSP accounts.

The listing also provides dates that the individual ceased to be an insider. At that point, the individual is no longer required to report their filings. This means that the balance is no longer current – but a snapshot of past holdings and a possible indicator of current holdings.

Turning SEDI Insider Reports Into Intelligent, Functional Information

To illustrate how information can be used, below is a table compilation of information about Eric S Sprott’s current holdings as listed on SEDI (as of 14 February, 2014)

Issuer	Number of Common Shares	Trading Price at Close February 14, 2014 (as listed on TMX.com)	Value
Sprott Inc	Indirectly controls 88,141,270 common shares through 2176423 Ontario Ltd Directly owns 100,000 common shares Total: 88,241,270	$3.37	$297,373,079.90
Sprott Molybdenum Participation Corporation	Indirectly controls 3,976,000 common shares through Sprott Asset Management Inc	n/a	While SEDI indicates Sprott is still an insider of this company, additional research finds that the company was wound down in 2009. Therefore, this has a zero value.
Sprott Physical Gold Trust	Directly owns 3,865,100	$11.01	$42,554,751.00
Sprott Physical Silver Trust	Indirectly controls 426,056 common shares through the Sprott Foundation Indirectly controls 542,500 common shares through Sprott Inc Total: 968,556	$8.71	$8,436,122.76
Total:			$348,363,954

Reviewing Sprott’s SEDI Insider Report also tells us:

He was formerly an insider of Central Gold Trust (effective until 2005-05-04) and Sprott Resource Corp (effective until 2012-06-04).

This information may be helpful if you want to prepare a relationship map for Mr. Sprott’s. You can go back into the SEDAR reports and see who else served on the board of directors at that time. Are any of these former directors linked to your organization? Would they make introductions to Mr. Sprott?

He controlled 1.8 million common shares of Sprott Physical Gold Trust through the Sprott Foundation, but sold those shares in 2011. The report indicates he sold them for $16.04 per share, netting $28,878,120 for the foundation.

Do the funding guidelines of the Sprott Foundation align with the project you are seeking to fund? Would approaching the foundation for support have a better chance of success than going directly to Mr. Sprott?

TIP: When looking up share prices on TMX.com, take a quick look at the 52 week low and 52 week high. This gives an indication of whether the stock is going up or down which may impact a prospect’s receptiveness to a significant request.

Mining SEDAR For Information Gems

Securities filings on SEDAR are helpful in preparing research for both corporations and for individuals. Filings include information about the company’s background, leadership, board, current activities, financial position, and current focus. Fillings also include biographies of the executive and board of directors, their share holdings and stock options, their compensation, and names of other public companies where they are insiders.

There are many types of filings, some more helpful than others. Below is a list of the key filings available and the type of information found in each that might be most useful to prospect researchers. Financial statements are excluded as they are generally easily available on a host of sites, including corporate websites.

Key Filings	Contents	What To Look For….
Annual Information Form	Corporate structure & inter-corporate relationships	Corporate profiles A listing of parent companies and subsidiaries and the ownership structure.
	Company overview History and development of the business	Corporate profiles Information that clarifies the company’s business, how it developed and the focus of future growth.
	Industry overview	Corporate profiles An analysis of the sector and listing of competitors. *TIP:* This is really helpful in assessing the growth in the sector and prospecting for companies that are active in that sector. Individual profiles *TIP: If your prospect isn’t a named officer of their company, review the competition’s filings. There may be salary disclosure for an individual in a similar position.*
	Prior year trading history	Individual profiles *TIP*: Sometimes an individual’s SEDI report will indicate that they sold shares but not list the sale price. This document provides the average share price by month and can be used to estimate the value of the sale.
	Biographies of directors and officers	Individual profiles Information to start a biography or provide confirmation of information that has already been identified. Names of other companies where they are/were an officer/director.
	Risks facing the company and the industry	Corporate profiles Risks facing the industry that will give clues as to issues to be aware of when reviewing recent news releases and media reports.
	Dividend history	Individual profiles *TIP:* Individuals who have significant shareholdings may receive substantial dividend payments. The history can help you to calculate this income.
	Legal proceedings and regulatory actions	Corporate profiles Indications of financial problems, issues of sustainability, or legal issues. Read this section carefully – you don’t want to be linked to a scandal.
	Possible future development	Corporate profiles Statements that indicate the company’s future plans.
Management Information Circular / Directors’ Circular	Lists the board of directors, including: a short biography; their age; their dates of service; whether or not they are independent; the number of shares owned/controlled by each director; and, their service on the boards of any other public companies in the past five years	Corporate profiles The decision-makers in the company. Individual profiles Information to start a biography or provide confirmation of information that has already been identified. Information regarding a prospect’s capacity and network.
	Director compensation, including retainers, committee fees, board fees and DSUs/RSUs	Individual profiles Specifics of an individual’s compensation: salary, board fees, DSUs, RSUs. *TIP:* Even if your prospect is not one of the named executives, this gives you an indication of where your prospect’s income tops out. Details of the management contracts. If your prospect has worked for a company that is/has undergoing / undergone a change of control, the management contracts will specify how the prospect benefitted. Senior executives may have received several years of salary and benefits, pay out on option benefits, and other types of payments.
	Compensation of the five highest compensated senior executives Details of existing management contracts Includes termination and change of control benefits for a minimum of the top five highest compensated senior executives
	Short biography for a minimum of the five highest compensated senior executives	Individual profiles Information to start a biography or provide confirmation of information that has already been identified.
	May include a list of comparator companies	Corporate profiles *TIP:* If you are prospecting for a specific project, this list may help you identify additional prospects within the same sector. Individual profiles *TIP:* If your prospect is not one of the named executives, a look at compensation for individuals in similar positions in comparator companies may help estimate your prospect’s income.
	Information about stock options, vesting dates, and exercise price	Individual profiles Specific details that may not be included in SEDI regarding the exercise price of options or the vesting dates. If you know that your prospect has 100,000 shares that vest next year and the exercise price is well below the current trading price, this can help frame your request to coincide with the vesting dates as you know your prospect could be capable of a generous gift.
	In the case of a proposed acquisition or take over, the Information Circular will include terms of the deal, how the deal came to be, and management’s recommendation to shareholders	Individual profiles Specific details about the purchase of outstanding shares. This will help you to determine how your prospect can benefit from a potential sale.
Material Change Report / News Releases	Summary of any news disclosing the nature and substance of a change in the affairs of the company that could be expected to have a significant effect on the market price or value of any securities	Corporate profiles Insight into the company’s current financial situation or future direction.
Prospectus (short form or long form)	Description of the offering Description of the company (nature of business, corporate structure, recent acquisitions, and risk factors) Detailed financial information Management’s Discussion and Analysis detailing the financial performance, financial condition and future prospects of the company Detailed information on management, directors and principal shareholders	Corporate profiles A summary of information about a company about to go public or a public company that has new investment offerings. Individual profiles Information about the share holdings of the directors and named officers.
Take Over Bid Circular	Describes the terms and conditions which the offerer will purchase the issuer’s securities from shareholders	Corporate profiles Details of the take-over, including: how much of the offering is in cash versus exchange of shares, and assumption of debt. Details about assets not included in the proposed deal. Individual profiles *TIP:* To determine how your prospect will benefit from the take- over, look to see if they will receive all cash for their shares? A combination of cash and shares in the offer or company or in a newly formed company? Will they be involved in managing some of the excluded assets once the deal is completed?

In Summary

SEDI and SEDAR can provide tremendous details about public corporations and their officers and directors. While they are great resources, keep in mind that this information is not comprehensive, but provides indicators of an individual’s total capacity and clues to a company’s future plans. Through the analysis of this information and information identified from other sources, we, as prospect researchers can help clarify a prospect’s capacity and affinity to our organization or specific projects.

BEGINNERS’ GUIDE TO SEDI & SEDAR FOR PROSPECT RESEARCH

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