A quick look into Toro Investment Partners, the company that revealed this morning that it had taken a 5% stake in embattled mobile services company NQ Mobile Inc (NYSE:NQ), offers some interesting information. According to SEC filings, Toro Investment Partners has just $32 million in assets under management. This morning’s revelation was worth around $40 million at today’s prices.

NQ Mobile

If those numbers hold up, assuming Toro hasn’t gotten massive new investment since October 29th, when the AUM was recorded or took the shares at a discount, Toro Investment Partners must be very highly leveraged on this morning’s bet. The company did not reveal how it financed the investment, but few other explanations make any kind of sense. A high degree of leverage seems the most likely.

NQ Mobile bet by Toro

NQ Mobile Inc (NYSE:NQ) appears to be falling apart at the seams if the company’s stock movements are taken as gospel. Ever since Muddy Waters Research released a paper on the company, stock has been depressed. The stock fell from an all time high of over $25 on October 18 to just above $10 per share. Today saw the firm’s value rise on the news that Toro had taken a 5% stake and news that the company may be close to a deal with a large Chinese smartphone manufacturer.

Regulatory filings show that Toro Investment Partners did not hold any stock in NQ Mobile Inc (NYSE:NQ) at the end of the third quarter. The investment firm appears to have used a good deal of debt in order to make their bet on a company much of the market appears to be going against.

According to today’s regulatory filing Toro bought 7,591,695 shares in NQ Mobile Inc (NYSE:NQ). At current levels that investment is worth around $30 million.

NQ Mobile short

The Muddy Waters research report on NQ Mobile Inc (NYSE:NQ) alleged that the company’s cash position was somewhere around the zero mark, the company’s revenue was a manufactured accounting number rather than real financial data, the company’s software products are not useful, and the company has few clients and almost no users in China.

The allegations caused a massive drop in the value of the company in a number of hours, but the firm has since recovered . The bet against NQ Mobile (NYSE:NQ) is still ongoing. Toro has taken the other side of the bet at great cost to itself. A single bet of multiple times assets could be disastrous for the fund.

UPDATE: An earlier version stated that Toro had a $100 million stake in NQ. According to the firm, the number is closer to $40 million, as the current version of the article states.