SEC Form ADV (Investment Adviser Public Disclosure) signed by Toro's CCO Harry Morad on September 9, 2013 indicates Toro managed $32 mil in assets, down from $120 mil reported in 2011 (pre-Ambow debacle) . Go to form ADV, section F (2) (a) If yes, what is the amount of your regulatory assets under management? Discretionary $32000000.0
Yet, Toro bought about 7.6 mil ADS of NQ stock during Q4?? Even if they were lucky enough to buy at the low of around $9, that's a $68 mil buy-in. So at face value, it appears Toro is margined to the gills (2x or more) on it's NQ investment - not something I'd be happy with if my money was invested with Toro. So now, are you saying that Harry added more to the 7.6 mil ADR's already owned?
Leverage aside, suppose they bought in at a cost higher than current PPS? NQ traded between $7.58 and $25.90 during Q4, so it's anyone's guess but Toro's. But given that NQ trades at 50% below the Q4 high, it is conceivable that Toro could be underwater once again. Then , let's suppose Toro went to China and found traces of improprieties at NQ. Would they dump their enormous holdings now at a loss or hope that Deloitte conveniently gives NQ a thumbs up (ala Longtop Financial Technologies) so they can exit at higher prices?
You decide. One thing is sure, based on the ADV report, Toro can't afford to be on the wrong side of this trade. If they are, the Titanic will look like a dinghy next to them.
app, you ever read about Jack Welch said why fire an employee who had made a mistake? Now that employee had learned a lesson at GE. You don't want the employee to take his education and go work for Westinghouse at GE's expenses.