Joe Mansueto, the unassuming billionaire who founded investment research firm Morningstar (MORN), isn't one to get too ruffled, even by a worldwide financial crisis.
"He stays very focused on long-term goals," says Don Phillips, the president of Morningstar Fund Research who has worked with Mansueto for 24 years.
Maybe that's why Mansueto is expanding his company at an increasingly aggressive pace. Morningstar made six significant acquisitions last year and has already bought five companies this year. Deals include investment research and consulting businesses in Australia, the United Kingdom, and France; Footnoted, a blog popular with investors for its ability to find juicy details in SEC filings; and the $52 million purchase of Realpoint, a small credit-rating firm.
After the financial crisis, "a big issue is 'who do you trust?' " Mansueto says, in an interview May 26 with Bloomberg News and Businessweek.com. "Over time, we've become known as the investors' advocate, very firmly standing up for what's right for investors."
In December, Morningstar announced plans to start rating credit products, beginning with corporate bonds. It's a move made possible by the perceived failings of the established credit-rating firms, Moody's (MCO), the Fitch subsidiary of France's Fimalac (FIM:FP), and Standard & Poor's, a division of The McGraw-Hill Companies (MHP).
"To me, it's a natural evolution of our business," Mansueto says. Seeking safety, many investors have fled from stocks to bonds in recent years. "That's where investors are putting their assets, and so they're looking to us for guidance."
Mansueto, 53, started Morningstar out of his Chicago apartment in 1984, selling data on mutual funds to individual investors. The company has gradually offered more and more data and research on a wide range of investment products, from stocks and annuities to exchange-traded funds and hedge funds.
From the beginning, Phillips says, "Joe thought like an individual investor." The company's analysts and executives haven't been afraid to criticize major financial players, he adds. "We've been there to remind the industry that if the investor doesn't win, then everyone loses."
Morningstar's offerings, which include a website aimed at individual investors and other products for financial advisers and institutions, brought in $479 million in revenue in 2009. Net income is up 165 percent since Morningstar became a publicly traded company in 2005.
The company gets qualified praise from advocates for individual investors like John Bogle, the founder and retired chief executive officer of Vanguard Investments who now runs Bogle Financial Markets Research Center.
"As an information source, I think it's very difficult to do better than Morningstar," Bogle says. He calls Mansueto a person of "high personal integrity." His only quibble: In its fund offerings, "they pride themselves on their ability to pick winners, and of course they have a mixed record on that. Everybody does."
Though he has reduced his holdings over the years, Mansueto still owns 51 percent of Morningstar, giving him shares worth $1.2 billion.
For a billionaire, Mansueto keeps a low profile. At Morningstar's new headquarters in the heart of Chicago's Loop, no one—including Mansueto—has their own office. He earns a salary of $100,000 per year, less than a third of the 2009 compensation of each of the four senior executives directly under him.
"His style is extremely informal," Phillips says. "You could walk by Joe on the street and never guess 'That guy's a billionaire.' "
In Chicago, Mansueto's highest-profile actions have been philanthropic. He and his wife in 2008 gave $25 million to the University of Chicago for a 3.5 million-volume library—to be called the Joe and Rika Mansueto Library—designed by architect Helmut Jahn.
Still, as recent acquisitions demonstrate, Mansueto thinks of Morningstar as a global company, not at all limited to Chicago or the U.S. About half of the world's investable assets are based in North America and half overseas, Mansueto says. "Over time, our revenue mix should approximate that percentage," he says. With overseas sales now less than 30 percent of sales, the company "has room to grow."
"A lot of the capabilities and analytics we've created in the United States can really be applied to investors around the world," Mansueto says.
And the advice that Morningstar gives to investors is unlikely to change—even after the devastation of a worldwide financial crisis and a deep U.S. recession.
Mansueto says the crisis actually demonstrated the value of some Morningstar mantras, especially diversification of portfolios into different asset classes and the idea that one should keep a long-term focus.
Despite problems with many investment products such as securitized debt, other products like the mutual fund have been "pretty solid."
"A lot of the things…questioned during this downturn really aren't things that necessarily should be thrown out," Mansueto says.
Steverman is a reporter for Bloomberg Businessweek's Finance channel.
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