ETF News

UPDATE expands after Morningstar deal

* Footnoted blog to add staff, expand coverage

* to run some stories to boost traffic

* Terms of acquisition not disclosed

(Adds hedge fund manager comment)

By Aaron Pressman

BOSTON, Feb 9 (Reuters) - Popular financial blogger Michelle Leder, who helped uncover numerous corporate shenanigans buried in securities filings, said she will expand her website,, 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, 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 collection.

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.


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.TOTRI.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 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 Andre Grenon)