DEFINITION of 'Shareholder Letter'

A shareholder letter is a letter written by a firm's top executives to its shareholders to provide a broad overview of the firm's operations throughout the year. The letter generally covers the firm's basic financial results, its current position in the market, and some of its plans. It can also speak to specific events that have happened throughout the year, changes in the company's stock price, or reiterate aspects of its vision. It's a chance for the executives of a firm to speak directly to shareholders. The shareholder letter is generally written once per year and is included in the beginning of the firm's annual report and can usually be found in the investor relations section of a company's website.

BREAKING DOWN 'Shareholder Letter'

The shareholder letter can be a good first step toward getting a broad overview of a firm that you are analyzing for investment. However, it is important to understand that the shareholder letter, along with many other parts of the annual report, is normally written in a way to put the company's operations in the best possible light. Investors will want to take the information in the shareholder letter with a grain of salt and be sure to delve more deeply into the firm's financial results and perform independent research on the company and its industry before drawing conclusions. The letter may address specific items within the company's financial statements or filings such as the 10-K or 10-Q, so it can be a good idea to look for information within these documents that substantiate claims made within the shareholder letter.

RELATED TERMS
  1. Synthetic Letter of Credit

    A synthetic letter of credit is a letter of credit that a bank ...
  2. Bank Confirmation Letter - BCL

    A bank confirmation letter is a letter confirming that a line ...
  3. Bank Letter Of Credit Policy

    A bank letter of credit policy allows banks to verify letters ...
  4. Reservation Of Rights Letter

    A reservation of rights letter is provided to the insured party ...
  5. Engagement Letter

    An engagement letter is an agreement defining the legal relationship ...
  6. Letter Of Moral Intent

    A letter of moral intent is written to a bank from a parent company ...
Related Articles
  1. Managing Wealth

    Letters of Instruction: Don't leave life without one

    A letter of instruction, or letter of intent, is a simple document that can take the guesswork and headache out of settling your estate.
  2. Financial Advisor

    Buffett's Annual Shareholder Letter, 2016 Edition

    In his annual letter to shareholders, Berkshire Hathway chairman Warren Buffett touched upon a broad array of themes, including BNSF and climate change.
  3. Investing

    Know your shareholder rights

    Common-stock owners have numerous privileges and should be vigilant in monitoring a company. Read on to learn what rights you have as a shareholder.
  4. Insights

    370 Economists Slam Trump, 306 Slam Clinton, 1 Slams Both

    300 economists contra Trump, another 300 opposed to Clinton. We talked to the one who's against both.
  5. Investing

    Why Contrarian Investing Is Not Very Smart

    Like most allegedly sure-fire methods in the investment industry, this one has its flaws too.
  6. Investing

    Balance Sheet: Analyzing Owners' Equity

    Analyzing owners’ equity is an important analytics tool, but it should be done in the context of other tools such as analyzing the assets and liabilities on the balance sheet.
  7. Investing

    Two Things We Learned From Billionaire Warren Buffett's Shareholder Letter

    Billionaire Warren Buffett heaped praise on his potential successors in his annual letter to Berkshire Hathaway shareholders.
  8. Investing

    Business Education Courtesy Of Berkshire's Shareholder Letter

    Warren Buffett's 2008 Berkshire Hathaway 2008 shareholder letter demonstrates how to manage businesses through thick and thin.
  9. Investing

    Understanding The Top SEC filing forms

    It's easier than ever to keep track of your SEC filing status online.
RELATED FAQS
  1. How legally binding is a letter of intent?

    Find out when a letter of intent (LOI) is binding and non-binding. Understand the role of drafting language, and when an ... Read Answer >>
  2. What happens to a company's stock when it goes bankrupt?

    Shareholders may be entitled to a portion of the liquidated assets in the wake of a company bankruptcy, but the stock will ... Read Answer >>
  3. What can shareholders vote on?

    Understand the usual voting rights of common stock shareholders, along with the importance of shareholders exercising their ... Read Answer >>
  4. How do a corporation's shareholders influence its Board of Directors?

    Find out how shareholders can influence the activity of the members of the board of directors and even change official corporate ... Read Answer >>
Trading Center