Hedge-fund company Pardus Capital Management preemptively halted investor redemptions early last year so it could conduct an orderly liquidation of its positions. Visteon Corp.'s (VSTN) bankruptcy filing last week provided just the latest instance of market turmoil swamping that strategy.

Pardus disclosed in filings last week that it sold all its 30.1 million Visteon shares for between 5 cents and 8 cents per share, meaning it lost about $200 million betting on Visteon's turnaround. Pardus, an activist investment firmbought shares at prices between $4 and $9 back in 2006 and 2007.

Pardus was among the first to halt redemptions in its hedge funds last year, doing so in March. At that time, Pardus had about $2 billion in management, and said it was stopping redemptions so it wouldn't have to sell its positions at fire-sale prices. Pardus, which doesn't use borrowed money, also said at the time that it wouldn't take new positions in its existing funds.

Over the past year, though, the value of the Pardus portfolio of companies has plummeted, like the rest of the market. According to U.S. and foreign filings, Pardus had nine equity holdings on March 31, 2008, with a total market value of about $1.2 billion. Now, the company lists seven equity holdings, with a value of just over $550 million.

Pardus said it wouldn't comment on the Visteon sale, or any of its positions. As an investor in distressed situations, Pardus most likely has some debt holdings, too, although it wouldn't be required to report those positions to regulators. It could also have derivative positions, and other holdings without filing requirements.

A person with knowledge of Pardus said the company hasn't changed its strategy since initially halting redemptions.

What's unique about Pardus is that while it said it wouldn't make any new investments, it's been very active in some of its existing ones. Along with another activist, Centaurus Capital, Pardus was able to get French IT company Atos Origin SA (ATO.FR)to make changes to its board. As in most of its positions, Pardus has since sold some of its Atos stake.

Pardus had unsuccessfully pushed for a merger between Visteon and French parts supplier Valeo SA (FR.FR), another major holding. Pardus also sought a merger between two of its airline holdings, UAL Corp. (UAUA) and Delta Air Lines Inc. (DAL).

The firm still owns shares of another auto parts company in bankruptcy, Delphi Corp. (DPHIQ), as well as some shares of UAL, which operates United Airlines. Pardus has trimmed both of those positions recently. Pardus has also trimmed its stakes in U.K. travel company Thomas Cook Group PLC and Virgin Media Inc. (VMED).

Pardus was founded in 2005 by Karim Samii, an alumnus of Credit Suisse First Boston who later became a restructuring specialist at WR Huff Asset Management Co. Pardus quickly got under managers' skin at companies in which it had invested, pushing for new board members or changes in strategy.

One of Samii's early targets was Bally Total Fitness Holding Corp., where Pardus said management was "lining its pockets at your expense" in a 2006 letter to shareholders. Pardus succeeded in getting its nominees on the companies board, but its equity was wiped out after the company emerged from a "prepackaged" bankruptcy plan in 2007. It later shared part of a payout set aside for former shareholders.

In an interview with The New York Times on the eve of Pardus's launch in 2005, Samii called the venture a "big bet."

"But if you think you're good, you take the risk," he said.

-By Joseph Checkler; Dow Jones Newswires; 201-938-4297; joseph.checkler@dowjones.com

-By Gregory Meyer; Dow Jones Newswires; 201-938-4377; greg.meyer@dowjones.com