* Footnoted blog to add staff, expand coverage
* Morningstar.com to run some stories to boost traffic
* Terms of acquisition not disclosed
(Adds hedge fund manager comment)
By Aaron Pressman
BOSTON, Feb 9 Popular financial blogger
Michelle Leder, who helped uncover numerous corporate
shenanigans buried in securities filings, said she will expand
her website, Footnoted.org, after joining Morningstar Inc
(MORN.O) this month.
Investment research firm Morningstar, based in Chicago,
announced on Tuesday it acquired the site, to be renamed
Footnoted.com, for an undisclosed price.
Leder, a former newspaper reporter, has been blogging since
2003 about news that companies hoped no one would notice in
filings with the Securities and Exchange Commission. Now she
plans to hire additional staff and write more frequently.
"Companies think they can unceremoniously dump all this
stuff into the wilderness," Leder, 43, said in an telephone
interview from her office in Peekskill, New York. "We try to
call them out."
Kunal Kapoor, president of individual investor software at
Morningstar, said he wants Leder to continue doing just what
she has been doing, including writing critical articles about
excessive pay and perks for senior executives.
Leder recently had her readers vote on the most egregious
footnote she uncovered in 2009. The winner was a disclosure in
April by Chesapeake Energy Corp (CHK.N) that the utility had
paid its CEO, Aubrey McClendon, $12 million for his antique map
Some articles will also appear on Morningstar's own site.
One goal of the transaction, Kapoor said, is to boost
readership at the Footnoted site, which gets about 500,000 page
views per month currently.
KRISPY KREME REVEALED
Without disclosing the purchase price, in an entry on her
website, Leder joked that, "while I negotiated mightily for the
keys to the Gulfstream, the corporate apartment in Paris, the
company yacht, the lifetime consulting contract and, of course,
a tax gross up -- all crazy perks we've written about in
various M&A deals -- I came up empty handed."
Leder's close reading of thousands of filings a year has
turned up warning signs of financial problems at many
companies. She was one of the first to warn about
irregularities at Krispy Kreme Doughnuts Inc KKD.N in 2003
after uncovering a series of "related party transactions" in
the company's filings.
"Michelle is a known expert in the hedge fund community at
picking apart SEC filings to find when companies are
misrepresenting things," said James Altucher, managing director
at money manager Formula Capital in New York.
In 2008, Leder added a $1,000-a-year premium service,
Footnoted Pro, for speedy summaries of information in filings
most likely to affect stock prices.
Since going public in 2005, Morningstar has pursued a
strategy of growth through acquisitions, buying 18 companies.
In December, it announced a $51.5 million deal to buy
Logical Information Machines, which provides analysis of
energy, financial and agriculture businesses. In 2008, it paid
$12.5 million for 10-K Wizard, which also mines SEC filings for
information about companies.
The Footnoted deal also continues a broader trend of large
media and information companies buying up Web-based upstarts.
Thomson Reuters Corp (TRI.TO)(TRI.N) last year paid $18 million
for Web-based commentary site Breakingviews. And in 2008,
Guardian Group acquired the parent company of media Web news
site PaidContent.org for 4 million pounds plus additional
amounts which have not been disclosed, according to Paidcontent
founder Rafat Ali.
(Reporting by Aaron Pressman; editing by John Wallace and