Form 10

Form 10 is a registration statement filed with the U.S. Securities and Exchange Commission (SEC) to register a class of a company's securities for public trading. Think of it as a company's detailed autobiography, written just before it steps onto the public stage. This filing is most commonly used when a company “goes public” without a traditional Initial Public Offering (IPO). Instead of selling new shares to raise money, the company is simply making its existing shares available for trading on an exchange. This often happens in situations like a spin-off, where a parent company separates a business unit into a new, independent entity and distributes its shares to the parent's existing shareholders, or in a direct listing. The Form 10 provides investors with a comprehensive overview of the business, including its operational history, financial health, future prospects, and the risks it faces. For all practical purposes, it contains the same depth of information as the more famous Form S-1 used for IPOs.

For the diligent value investor, a Form 10 filing is like discovering a detailed map to a potential treasure island that most of the market hasn't noticed yet. Because these registrations aren't accompanied by the typical IPO hype, marketing roadshows, and splashy headlines, the newly listed companies can often be overlooked and, therefore, mispriced. This creates a fertile hunting ground for opportunities. Legendary investor Joel Greenblatt famously highlighted spin-offs—the most common source of Form 10 filings—as a place to find incredible bargains. A Form 10 provides all the raw material needed to perform a thorough analysis and calculate a company's intrinsic value before the crowd arrives. You get a clean look at the business, its financials, and its management, allowing you to form a solid investment thesis away from the noise of daily market sentiment. It’s a chance to do your homework and potentially buy a great business at a fair price right at its public debut.

Diving into a Form 10 can feel like drinking from a firehose, but focusing on a few key sections can make the process manageable and highly rewarding.

This is the “What do you do?” section. It describes the company’s products or services, its target markets, its strategy, and its physical assets (like factories or major offices). Reading this first is crucial for developing a fundamental understanding of how the company operates and makes money. Is this a business you can understand? If not, it's best to move on.

This is management’s mandatory confession of everything that could go wrong. While some risks are boilerplate, this section is a goldmine for the critical investor. It highlights industry-specific, financial, and operational threats. Pay close attention to risks that seem unique or particularly severe. It helps you understand the potential downside of an investment and forces you to ask, “What has to go right for this to be a success?”

This is the heart of the filing for any number-cruncher. It contains several years of audited financial statements (income statement, balance sheet, and cash flow statement). Critically, it also includes the Management's Discussion and Analysis (MD&A), where the leadership team explains the company's financial performance in their own words.

• A Special Note on pro forma Financials: In the case of a spin-off, you will often find “pro forma” statements. These are adjusted financials that estimate how the new company would have performed if it had been a standalone entity in the past. These require careful scrutiny, as they are based on assumptions, but they provide the best available picture of the new company's historical profitability and financial structure.

This section tells you who is running the show and who owns the company. Look at the executives' track records and how their compensation is structured. Are their interests aligned with shareholders? High ownership by management is often a positive sign. Information on major shareholders tells you if other sophisticated investors or the former parent company will retain a significant stake.

While both filings provide a comprehensive business and financial disclosure, their purpose is different, which has important implications for investors.

• The Goal: A Form S-1 is filed for an IPO, where the primary goal is to sell new shares to the public to raise capital. A Form 10 is filed to register existing shares for public trading, with no new capital being raised by the company in the process.
• The Hype: An IPO is a sales event, promoted heavily by investment banks. A Form 10 registration is a regulatory requirement, often with little to no marketing.

The key takeaway is that the lack of promotion around a Form 10 filing can lead to initial neglect from Wall Street analysts and the investing public. This “neglected orphan” status is precisely the dynamic that can create the price-value gap that value investors seek to exploit.

In early 2024, the industrial giant General Electric completed the spin-off of its power and energy division, GE Vernova. Before GE Vernova began trading on the New York Stock Exchange under the ticker “GEV,” it filed a comprehensive Form 10. This document gave investors their first detailed look at GE Vernova as a standalone business, free from the complexities of the old GE conglomerate. By studying the Form 10, an investor could analyze Vernova's diverse energy businesses (from gas turbines to wind power), scrutinize its pro forma financials to gauge its profitability, and understand its specific risks and growth strategies. This allowed them to build a valuation model and decide on a fair purchase price for the shares before they were subject to the whims of the market on day one of trading.