Do you have a reason to believe that M* does not calculate star ratings periodically on an automatic schedule (i.e. without discretion)?
Here are two statements from M* that the calculations are done monthly:
(In response to: " how often/when the star ratings are updated?") "Fund star ratings are calculated monthly." Edgars Vimba (Morningstar).
http://socialize.morningstar.com/NewSocialize/forums/t/274950.aspx (1/19/2011)
"So, any fund can get [a star rating]. We update it monthly" Russ Kinnel (Morningstar).
http://www.morningstar.com/cover/videocenter.aspx?id=662384 (8/21/14)
Regarding delay in publishing monthly figures, I haven't found a US statement, but this Australian M* statement is somewhat consistent with what you're seeing here:
"How Often are Morningstar Ratings (Star Ratings) Updated?
"Morningstar Ratings (Star Ratings) are recalculated and republished in the second week of each month, at the same time as performance figures. "
http://www.morningstar.com.au/Funds/FundsFaq#FFAQ14
As far as M* delaying data analysis is concerned, some of their methodology does build in lags. For example, when they categorize a fund, the assigned category does not necessarily reflect the current portfolio. That's done essentially for the second reason you stated - that transitory shifts may be just that and not reflect the overall character of the fund. Even so, there is a well-defined, methodically followed process; it's just that it includes some hysteresis.

msf said:
That you (and likely the rest of the investing world) expect Valeant to pull Sequoia's performance down further has no effect on the M* star rating.

Of course suppositions about the future performance of Valeant's common would not go into current star ratings. However, today's performance is in the books and is now past performance, as is its effect on SEQUX's NAV. And the performance of Valeant's common between its plunge on Oct 21 and today is also past performance, as is its effect on SEQUX's NAV during this time, as is its effect on SEQUX's performance numbers, enough to jar even its 3 and 5 yr TR figures. Doing the math and comparing those adjusted numbers to its peer group, my interpretation is that M* has now determined that SEQUX is a 3-star fund, based on past performance.
I was suggesting, with my dead man walking comment, that if M* had any reluctance to defer the star rating downgrade (1) because of, or as a courtesy to, SEQUX's fine historical record and management, and/or (2) because good news re. Valeant might emerge any day which would turn around its stock price in a jiffy, then today's "second leg down" may have relieved them of their reluctance to make the move. They simply couldn't wait any longer, because there was no longer reason to do so--- their star rating of SEQUX had to reflect reality, in the here and now.

In our rating system, RPHYX remains a top quintile fund based on risk adjusted return and a Great Owl ...

Why people are surprised with the change in stars of the fund ? Star rating is purely on mechanical calculations based on the risk-adjusted performance of the funds and a reflection of their aggregate past record (3, 5 and 10 years) with more weightage long term record than short. Periodically star ratings are caluculated every year and I am not sure how frequently they do that and publish the new start ratings of the funds.
If M* mentioned this fund is under review, that is for their qualitative rating (Gold, Silver, Bronze, etc.) based on their Analst analysis of the fund

And, in a freakish development, the fund with the second-largest stake in Valeant is up 16.5% YTD. That's Tanaka Growth (TGFRX), with an 11% Valeant position.
David

TGFRX benefited by its position in FING B Fingerprint Cards, up 123% over the past 3 months and up 1240% YTD.
Kevin

@Jim0445
The reorganization is suppose to occur around 11/16/15 as per this filing, http://www.sec.gov/Archives/edgar/data/889284/000119312515299132/d11216d497.htm

Yeah, once I get my 1st $ 1 BILLION I will consider a 90/10 allocation...!
I have in my possession an old (~1960s era) edition of "The Intelligent Investor", written by Buffett's one-time mentor, Ben Graham. In it, he discusses the topic of asset allocation. He wisely admitted that there is no optimum allocation advice for all investors, but as a general guideline that a 2-asset (equities, US Treasurys) portfolio should generally contain no more equities than 75% and no less than 25% for most investors. Graham described that investors younger and more risk-tolerant might have as much (but no more) than 75% equities; older and less risk-tolerant investors should still have at least 25% equities. Basically any extreme allocation outside the 75/25 to 25/75 was not recommended.
Graham's counsel always seemed to me to be simple -- and thus easy for an individual to implement-- and wise.
(Several years ago, I paged through a modern edition of Graham's book in a Barnes & Noble, looking for that passage, but it seems to have been posthumously excised, perhaps replaced by "newer, enlightened" thinking during the great 1990's bull market).
An aside: I doubt Graham would have much positive to say regarding the current excitement with "alternative strategies" -- especially given the expense ratios in vehicles available to retail investors.

Ya know, Charles adds some clarity with the data. Recent performance hasn't been so hotsy-totsy. Add to that the (reasonable) supposition that their huge Valeant holding is a dead man walking, do the math, and M* pretty much had to knock off some stars. A cautionary tale for those who believe that concentrated MFs and high active share numbers hold to the virtuous path, in and of themselves. When one goes with concentration anywhere inside the portfolio, I think it's important to mine a little deeper on the screening before making choices, and to look at other stats we rarely talk about on the Board: tracking error and information ratio.
[I think it was @MJG who made this point in a comment over a year ago]
Anyone know how those figures have moved for SEQUX, over the past 5 years?

SEQUX rates a 1 across the past 1 and 3 year periods and a 3 across the past 5 year period ... through October in the MFO system, based on Martin risk adjusted return. Drawdown reached 21% in October. Since M*'s composite rating is based on 3, 5, and 10 year ratings, would not be surprised if it now scores 3 stars.
Below are its risk/return metrics across various periods. Note that through October anyway, it only lost 3% for year, despite its October collapse, and it remains a top quintile fund across the current full cycle, which began November 2007.

In my inbox today
11/04/2015
MFLDX: MainStay Marketfield I
The Morningstar Star Rating for this fund has changed from 3 stars to 2 stars. For details, click here
RPHYX: RiverPark Short Term High Yield Retail
The Morningstar Star Rating for this fund has changed from 2 stars to 1 star. For details, click here
HHCAX: Highland Long/Short Healthcare A
The Morningstar Star Rating for this fund has changed from 4 stars to 3 stars. For details, click here
NEFZX: Loomis Sayles Strategic Income A
The Morningstar Star Rating for this fund has changed from 3 stars to 4 stars. For details, click here
MINDX: Matthews India Investor
The Morningstar Star Rating for this fund has changed from 3 stars to 4 stars. For details, click here
WSCVX: Walthausen Small Cap Value
The Morningstar Star Rating for this fund has changed from 4 stars to 3 stars. For details, click here
BRTNX: Bretton Fund
The Morningstar Star Rating for this fund has changed from 3 stars to 2 stars. For details, click here

@David... The fund was 5 stars through yesterday. Current Morning* status states "under review'.

Seriously, wasn't it five stars last month? I don't have evidence of it, but that's my recollection. If so, that's a mighty fast fall from grace.
In related news, Valeant is down another 14% for the day (Thursday, 11/5).
And, in a freakish development, the fund with the second-largest stake in Valeant is up 16.5% YTD. That's Tanaka Growth (TGFRX), with an 11% Valeant position.
David

With the amount of money to invest, Buffet's family can live off of interest without drawing down on equity positions. I was thinking about Buffett's method when I bought an entry position in VFIAX on 9/10/15. It is now almost 8% higher.

Never heard of New Sheridan. Down about 25% in the past year.

Nova aired Part 1 of the "Making of North America". Let's keep in mind the natural forces at work when we discuss climate change. The discovery of Fossilized Palm fronds and coral found along the coast of Alaska are discussed in this episode.
Article and Part 1 Episode:
gpb.org/blogs/family/2015/11/04/nova-making-of-north-america

Interesting to think that Oil companies started preparing for this 40 years ago.
Exxon Predicted the Present Cheap Solar Boom Back in the 1980s
"The oil giant's 25-year-old research into the economics of solar was spot-on."
I recall years ago Exxon Mobil buying the patent rights to integrated solar roof shingle technology (not panels that are mounted on the roof, but are integrated into the shingle).
bloomberg.com/news/articles/2015-11-04/exxon-predicted-today-s-cheap-solar-boom-back-in-the-1980s
Article on Integrated Photovoltaics:
nytimes.com/2009/09/27/business/27novel.html?_r=0

@VintageFreak I see you're interested in the Grandeur Peak Global Micro Cap Fund from your other posts. It has a 2.00% expense ratio. But it is that kind of fund which has a high expense ratio but a small asset base that I am talking about. Is it fair to say that another of their funds--Grandeur Peak International Opps Inv GPIOX--has an "average" expense ratio of 1.35% when it is hard closed to all investors at $765 million while Acorn International Z ACINX with $7.3 billion and a 0.93% expense ratio has a "low" one?
morningstar.com/funds/xnas/acinx/quote.html
morningstar.com/funds/XNAS/GPIOX/quote.html
That "low" expense ratio rating factors into Morningstar's "silver" rating of Acorn. But is it really low if Acorn is collecting many more millions in fees than Grandeur? Is it really low if Acorn now has to navigate illiquid foreign small caps as a result with a large $7.3 billion portfolio? It's market impact costs will be higher and its flexibility to invest in the smallest companies less than Grandeur. Only by looking at total dollars in fees would someone recognize that Acorn isn't necessarily a low fee fund and Grandeur isn't necessarily a more expensive one.

As Bogle suggested recently, look at the dollars they're taking in, not just the percentage. 2% of $25 million means they're getting paid about $500,000 a year to run a global microcap fund, covering tiny obscure faraway companies. Sounds like a bargain to me. Plenty of people here think it's a bargain to pay 0.5% to invest in a domestic large cap fund with $10 billion, which means those managers are getting paid $50 million a year to cover highly liquid big companies where research is easily accessible.

Here are some of my additional "finds" I do not see in this thread. Of course, these are available through capgainsvalet.com (yes, a shameless plug).
Blackstone Alternative Investment Funds
http://www.blackstone.com/docs/baif/2015-estimated-distribution-table---mfs.pdf?sfvrsn=2
Calvert Funds
http://www.calvert.com/resources/tax-center/estimated-distributions
City National Rochedale Funds
http://www.citynationalrochdalefunds.com/fundinformation/download/CapGainsDistributions_2015_Equity.pdf
Domini Funds
https://www.domini.com/shareholder-services/tax-center/december-2015-distributions-estimates
Invesco Advisers Inc
http://www.invesco.com/static/us/investors/contentdetail?contentId=9a64a8c235512410VgnVCM100000c2f1bf0aRCRD
Jensen Funds
https://www.jenseninvestment.com/jmf/jensen-funds/forms-documents/distributions/
Morgan Stanley Funds
http://www.morganstanley.com/msamg/msimintl/docs/en_US/publications/forms/Tax/2015_estimated_yr-end_distributions.pdf
Nationwide Funds
http://www.nationwide.com/mutual-funds-distributions.jsp
Parnassus Funds
http://www.parnassus.com/parnassus-mutual-funds/DividendInfo
RBC Funds
https://us.rbcgam.com/resources/docs/mutual-funds/pdf/other/RBC_Cap_Gain_Distribution.pdf
Transamerica Fund Asset Management Inc
https://www.transamerica.com/images/capital-gain-distributions_tcm73-37718.pdf

"So far, about three-quarters of the S&P 500 have reported results, with profits down 3.1 percent on a share-weighted basis, data compiled by Bloomberg shows. This would be the biggest quarterly drop in earnings since the third quarter 2009, and the second straight quarter of profit declines. Earnings growth turned negative for the first time in six years in the second quarter this year."
The trend is your friend? Ummm, which one would that be? Eni Meeni Miney Mo.