L.A.'s $19-billion hedge fund no one knows about

With little fanfare, Canyon Partners has become the 9th-most profitable hedge fund in the world, according to rankings by Bloomberg Markets magazine. The place is run by Joshua Friedman and Mitchell Julis, two Drexel alums who, true to their roots, focus on troubled assets, junk bonds to mortgage- backed securities. Bloomberg senior writer Seth Lubove takes a look:

The company's flagship $9 billion Canyon Value Realization Fund LP has had only two down years since it began in 1995. The fund's multistrategy investing technique allows managers to shift investments as market conditions change. After the flagship fund lost money in 2008, Friedman and Julis took advantage of the financial turmoil by investing in beaten-down bank loans and mortgage-backed securities.

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Canyon's office on the 11th floor of a glass-and-metal building in the Century City district is sparsely decorated in keeping with the firm's low profile. The only works of art in the reception areas and halls are black-and-white photos of rocky canyons bought for $50 each. The firm's 215 employees are part of a culture that Julis says resembles a graduate school study group. The firm's small library is spilling over with books. About six senior managers oversee investments, with input from the founders.