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How to check stock dilution yourself

By , Signal8 Research. Published by Signal8 Inc.

You can check any US-listed stock for dilution for free on SEC EDGAR in about 20 minutes. Start from the latest 10-Q or 10-K for the share count and existing instruments, then read every filing made after it for new ones. A paid dilution tracker does exactly this for you, faster; this guide is the method it should be following.

  1. Find the company on EDGAR. Search the ticker at sec.gov/edgar/search and open its filing list.
  2. Read the cover of the latest 10-Q or 10-K. The cover page states shares outstanding as of a recent date. This is your starting count. Foreign issuers file 20-F or 40-F annually and interim results on 6-K.
  3. Read the equity footnote. In the same report, find the stockholders' equity note. It lists warrants (count and exercise prices), convertible notes, preferred stock, options and any ATM sales in the period.
  4. List every filing since that report. Look for 8-K (Items 1.01, 3.02 and 5.03), 424B prospectus supplements, S-1, S-3 and F-3 registrations, and EFFECT notices. Each can add instruments or shares.
  5. Check the shelf. If an S-3 is effective, note its total and subtract what earlier 424B supplements have used. For a company with under $75 million of public float, the baby shelf rule caps sales at one third of that float per 12 months.
  6. Add it up on one basis. If there was a reverse split, put every count on the post-split basis before you add anything. This is the step most often done wrong.

What counts as dilution

Anything that can increase the share count: new shares sold in an offering or through an ATM, warrants and options that can be exercised, notes and preferred stock that can convert, and shares issued for acquisitions or to settle debt. Shares registered for resale do not increase the count when sold, but they do add to the supply that can trade.

When a tracker is worth paying for

If you check more than a few tickers a week, or you need to know within minutes of a 4:05 PM filing, the time saved is worth more than the subscription. Compare the options on our best dilution tracker page. To check one ticker without paying, use the free dilution summary on Signal8's stock dilution checker, which cites the filing behind each line.