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Comment by xaranke | Hacker News Reader

Is it just me, or does 33 pages of risk factors seem pretty high?

I used to put together deal documents similar to this when I worked in finance. It was literally my job to think about potential risks and then list them out.

"Hey boss, this investment has possible earthquake risk, but that seems very remote; do I have to put that in?"

"Yeah, put it in. No one reads the document anyway unless it goes to court and in that case, you can get dinged for leaving out stupid risk factors, but not for having them in."

Exactly. Serious investors aren't going to look at this list, but rather do their own research. This is basically to protect against lawsuits.

I read them so that I can understand catalysts for a great trade, and jump on that when it happens.

My favorite risk factor was "Timothy Sykes doesn't like us"

Just read somewhere about research somebody had made regarding the risk statements (established) companies put out. The result was that statements getting changed correlated with stock price taking a hit in near term.

Did not read the study itself. My explanation would be that since companies are not changing these for fun, they are probably changing them because they see some previously unexpected risk possibly manifesting itself and want to cover their back.

Unfortunately, I can't find the pointer to the study or the article.

Edit: Found the article, I guess this was posted to HN: https://www.theatlantic.com/magazine/archive/2018/09/the-sec... (search for NetApp to find the part about the study)

you have to put literally every single risk factor you may face or consider facing for investors. it's a CYA for the company.

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