The next time a hedge fund manager pitches you on his strategy to invest most of his portfolio in automakers and airlines, you might want to take a pass.

Of course, for investors in Pardus Capital Management, it's too late for that little gem of advice. The hedge fund, which launched in 2005 and now has $2 billion under management, said today that it has suspended investor redemptions "to protect the funds and their investors from external short-term pressure and to focus on realizing value on our portfolio companies for investors over an extended period of time." It wants to let the fund's portfolio companies know that they won't be forced to dump their holdings to meet capital requirements.

It's worth noting that Pardus, an activist fund, is not the latest victim of the credit crisis. In fact, the fund uses no leverage to back its equity portfolio. It simply made bad stock picks—but picks it believes still have the potential to turn around.

A person close to the fund said that the options it had to deal with redemption requests were to sell its holdings or add leverage to its balance sheet. It didn't want to do either, so instead it chose option No. 3: to lock investors in.

In November, Pardus made headlines when it wrote to the management of Delta Airlines asking it to pursue a merger with United Airlines. Merger discussions were not exactly a novel idea to the troubled airline industry, however. Delta continues to consider its merger opportunities, but now it's focused on Northwest Airlines as a potential partner.

Shares of Delta have dropped from $21 last summer, when it emerged from bankruptcy, to around $8 today. Shares of UAL, parent of United, reached $51 last fall when Pardus made the merger demands. Today, it trades for less than half of that.

Pardus also has a hankering for auto stocks. It owns substantial numbers of shares of General Motors and the auto-parts maker Visteon. Until late last year, it also owned a big chunk of Ford Motor.

How are those stocks faring? Losers. G.M. reached $42 in October, and it now is worth less than $20. Visteon's shares have dropped from $10 to $3.80.

Perhaps to "diversify" a bit, Pardus took stakes in certain media and technology stocks as well. As of the end of December, it owned several million shares of ICO Global Communications, a satellite company worth about $3 per share today, down from $4.50 in November.

Shares of Virgin Media, another Pardus portfolio company, have fallen from $29 last summer to $14 today.
 
And the seventh and final holding in Pardus' fund as of the end of 2007? SunCom Wireless. It's the only stock chart that looks remotely pleasing to an investor's eye: Last summer, it jumped from $15 to $26 in a very short order, and it continues to trade at nearly $27.

But a closer look at Pardus' filings shows that the fund didn't capitalize on that climb after all. It got into the stock sometime during the third quarter of 2007, when it had already reached its new highs.

Of course, if all of Pardus' recent bets have turned up on the losing side, Senator Barack Obama's supporters should be happy to know that the fund's founder, Karim Samii, is a supporter of Senator Hillary Clinton.