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Tickers in this Article: CAGC, AMEX:CGA, PTEC, VARI, A
It's always a fruitful search strategy to keep up with what other professional investors are buying and selling. Investors file 13D within 10 days of an entity attaining a 5% or more position in any class of a company's securities. Investment funds aren't interested in owning a meaningful share of stock unless they see tremendous long-term value or feel they can seek change to unlock value.

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Still Bullish On China
The Carlyle Group's bet on Chinese fertilizer company China Agritech (Nasdaq: CAGC) was among the most intriguing. China Agritech is quickly becoming one of the leading fertilizer companies in China's heavily fragmented fertilizer industry. Despite the fact that shares have surged several fold this year, China Agritech still trades for less than nine times earnings and is growing its top and bottom line by over 30 percent. Compare this to China Green Agriculture (AMEX: CGA), another quality fertilizer play in China that trades for nearly 16 times earnings. (For further reading, see 5 Must-Have Metrics For Value Investors.)

Looking at the Carlyle stake does pose questions, however. The deal was announced a few weeks ago when shares were trading in the high teens. However, Carlyle invested $15 million for 1.4 million shares, implying a price of $10.71 a share. Plus, it's getting an additional 928,514 warrants at an exercise price of $10.77. No question that Carlyle got an incredible deal owning shares at less than $11. It's no surprise that it took 16.5% of the company in this deal. It concerns me greatly that a company would issue its stock for such a substantial discount to the market price. But to be fair, this deal could have been in the works a few months earlier when shares were near that price.

Value In The Eye Of The Beholder
Another activist position initiated recently was in Phoenix Technologies (Nasdaq: PTEC), a software technology company. The activist investor was Ramius Capital, which now holds 12% of the stock. Most recent purchases were made Nov. 2 at around $2.30 per share, versus a current price of $2.60. Phoenix is a $92 million cap company with no debt and about $35 million in cash. However, current book value per share is less about 82 cents per share. If you take out goodwill and intangibles, tangible book value is negative. I'm not sure what Ramius has in mind at this point, but considering the company's size, Phoenix could be a very small position. (For related reading, check out Activist Hedge Funds.)

Value investor Mario Gabelli's Gamco Investors reported 5.2% ownership of Varian (Nasdaq: VARI), a manufacturer of scientific instruments for a host of applications. This is a very curious position. Gamco paid $51.17 a share for the stake. Yet on October 6, Varian shareholders overwhelmingly approved the sale of the company to Agilent Technologies (NYSE: A) for $52 a share. Granted, the deal must be approved by regulators to proceed. But considering that 13D filings must be filed within 10 days of attaining a 5% position, the timing suggests that Gamco was already aware of the deal. The plausible conclusion is that Gamco was buying Varian well before the deal and only triggered the 5% market recently. Today the shares are at $51, below the $52-a-share cash offer. Should the shares fall a little further, you may see a merger arbitrage play. (For related reading, check out Trade Takeover Stocks With Merger Arbitrage.)

Bottom Line
Interestingly, the above three positions all come with unusual twists. Aside from the Carlyle bet, it appears that further upside from these positions may be limited at best. (For more, see Activist Investors: A Good Or Bad Thing?)

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