As oil prices crater, hedge funds dive in

Dan Bannister | Getty Images

As oil prices round out a month of trading in the $40 range, hedge funds in both the U.S. and abroad are grabbing at investment opportunities in a distressed energy sector.

In recent months, a spate of money managers, including Lansdowne Partners, Avenue Capital, Carlson Capital and Blackstone's GSO Capital unit, have been raising fresh capital to deploy in either long-short energy stock picking, credit investing, or both. At the same time, hedge-fund investors say that finding ways to home in on the distressed oil industry has been a top priority of late.

Energy "is one of our top themes," said Charlie Krusen, whose $200 million fund of funds company, Krusen Capital Management, has fielded dozens of pitches from hedge funds and private equity shops focusing on the troubled sector in recent months.