This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Bigtime Investors Lose Big on China

Stocks in this article: CHBT CCME JGBO PUDA YUII CELM CAGC LFT DGW GS MS DB



Carlyle co-founder David Rubenstein.

One of the largest private-equity firms in the world, if not the largest, took 20% of a company called China Agritech (CAGC) back in October 2009, when it participated in a private-placement deal with the organic fertilizer producer. About a month earlier, Agritech's shares had been "uplisted" to the Nasdaq from the over-the-counter markets, having reverse-merged into a shell in 2005. As is the case with many such deals, there were "make-good" provisions in the private-placement contract with Carlyle. If Agritech didn't hit certain earnings targets, it would owe Carlyle more shares.

Agritech hit those earnings targets.

The investment was a flyspeck relative to Carlyle's many, many billions worth of portfolio companies, but the fund's presence as anchor investor seemed to suggest that heavy-duty, private-equity-style due diligence had at least taken place. Another institutional investor, Glickenhaus & Co. ended up taking a 1.6% stake in China Agritech based in part on the Carlyle imprimatur.

After gaining the Nasdaq listing, the company's stock ramped to highs of more than $30 before beginning a long collapse as short sellers attacked and auditors decided they didn't like what they saw. Neither did Nasdaq, which expelled the equity to the over-the-counter markets this year after yet another public battle between bears and bulls played out in the media and in the blogosphere. The company has yet to file a 10-K annual report for the year 2010.

Carlyle hasn't sold any of its Agritech stock, according to a person familiar with the matter

A spokesperson at the firm's Washington headquarters declined to comment.

5 of 7

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs