Established: 1990

Headquarters: 2000 Avenue of the Stars, Century City

Principals: Josh Friedman and Mitchell Julis, founding partners, co-chairmen and co-chief executives - Assets: $2.7 billion

Founded by three ex-Drexel Burnham Lambert executives, Canyon Capital Advisors has emerged as one of the largest hedge fund shops in Los Angeles. It specializes in distressed securities, securitized assets and risk arbitrage, among other investments. It is also a player in Hollywood, using hedge fund manager Qualia Capital to invest in entertainment companies.

Canyon Capital is publicity shy, unlike its affiliate company, Canyon Capital Realty Advisors, which makes high-profile real estate investments, including teaming up with Earvin "Magic" Johnson's investment house to invest in urban areas.

However, co-founder Josh Friedman was interviewed by Katherine Burton for her 2007 book "Hedge Hunters," telling her, "We tend to run a relatively low-volatility, well-diversified book, probably too diversified in my opinion, but that's who we are."

On its Web site Canyon Capital said it takes an "active management" approach and is always on the lookout for "debt securities of companies that are experiencing financial stress, whether or not they have reorganized." Yet while the current recession might provide ample investment opportunities, Canyon Capital's main Value Realization Fund was down 25 percent through September, according to Morningstar Inc. According to a November Wall Street Journal article, the firm was subject to "the equivalent of margin calls" from its lenders.

But Canyon Capital has weathered two previous investment downturns since its founding in 1990 by Drexel veterans Friedman, Chris Evensen and Mitchell Julis. Evensen has since left the firm, and Bobby Turner, who manages Canyon Capital Realty Advisors, has taken Evensen's place among the top management.

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