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Hedge Funds Are Dumping Morningstar, Inc. (MORN)

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Morningstar, Inc. (MORN)Is Morningstar, Inc. (NASDAQ:MORN) the right pick for your portfolio? Hedge funds are turning less bullish. The number of long hedge fund positions stayed the same which is a slightly negative development in our experience

According to most traders, hedge funds are perceived as worthless, outdated financial tools of yesteryear. While there are greater than 8000 funds trading at the moment, we at Insider Monkey hone in on the leaders of this club, about 450 funds. It is widely believed that this group controls the majority of the hedge fund industry’s total asset base, and by paying attention to their highest performing stock picks, we have brought to light a few investment strategies that have historically beaten Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Just as integral, optimistic insider trading activity is a second way to parse down the investments you’re interested in. As the old adage goes: there are a variety of stimuli for an upper level exec to cut shares of his or her company, but only one, very obvious reason why they would behave bullishly. Various empirical studies have demonstrated the impressive potential of this method if piggybackers understand what to do (learn more here).

With all of this in mind, let’s take a peek at the latest action regarding Morningstar, Inc. (NASDAQ:MORN).

What have hedge funds been doing with Morningstar, Inc. (NASDAQ:MORN)?

At Q1’s end, a total of 8 of the hedge funds we track held long positions in this stock, a change of 0% from the previous quarter. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their holdings considerably.

When looking at the hedgies we track, Chuck Royce’s Royce & Associates had the largest position in Morningstar, Inc. (NASDAQ:MORN), worth close to $134 million, comprising 0.4% of its total 13F portfolio. The second largest stake is held by Bares Capital Management, managed by Brian Bares, which held a $11.6 million position; 1.5% of its 13F portfolio is allocated to the stock. Other hedge funds that hold long positions include Jim Simons’s Renaissance Technologies, Israel Englander’s Millennium Management and D. E. Shaw’s D E Shaw.

Since Morningstar, Inc. (NASDAQ:MORN) has faced falling interest from the entirety of the hedge funds we track, we can see that there was a specific group of funds who sold off their positions entirely last quarter. Interestingly, Steven Cohen’s SAC Capital Advisors sold off the biggest investment of all the hedgies we watch, valued at an estimated $0.6 million in stock. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

What do corporate executives and insiders think about Morningstar, Inc. (NASDAQ:MORN)?

Bullish insider trading is best served when the primary stock in question has seen transactions within the past 180 days. Over the latest half-year time period, Morningstar, Inc. (NASDAQ:MORN) has experienced zero unique insiders purchasing, and 8 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Morningstar, Inc. (NASDAQ:MORN). These stocks are DigitalGlobe Inc (NYSE:DGI), FactSet Research Systems Inc. (NYSE:FDS), Broadridge Financial Solutions, Inc. (NYSE:BR), Dun & Bradstreet Corp (NYSE:DNB), and DST Systems, Inc. (NYSE:DST). This group of stocks belong to the information & delivery services industry and their market caps resemble MORN’s market cap.

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