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Are Third Avenue woes a sign of the next crisis?

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Wall Street is buzzing on the news of a redemption halt and liquidation of a well-known high-yield bond mutual fund.

If a well-respected value investment firm with an impressive track record such as Marty Whitman's Third Avenue Management can suffer such a misstep, are many more, less notable investors next?

Given the sell-off in the stock and bond markets Friday, the market believes the answer to that question is "yes."

Third Avenue sent a letter to clients Wednesday stating the liquidation of the Focused Credit Fund (FCF) is to protect investors:

"Investor requests for redemption, however, in addition to the general reduction of liquidity in the fixed income markets, have made it impracticable for FCF (Focused Credit Fund) going forward to create sufficient cash to pay anticipated redemptions without resorting to sales at prices that would unfairly disadvantage the remaining shareholders."

As of Wednesday, the Focused Credit Fund had $789 million in assets and returned a negative 27 percent year to date, according to Morningstar.

Noted bond fund manager Bill Gross of Janus Capital, formerly of Pimco, sees the news as a sign to take risk exposure down.

And Carl Icahn, Friday on CNBC's "Fast Money: Halftime Report," compared the junk bond market to a "keg of dynamite."

Other investors, however, think it is more of a one-off situation.

Brean Capital's Peter Tchir in an email to clients Friday explained the Focused Credit Fund was concentrated in the riskiest securities and may not be representative of the entire high-yield bond market with 50 percent of the fund in nonrated and 45 percent in CCC and below rated assets.

Read More Desperate Dow-DuPont megamerger bad for stocks

Jeremy Hill, managing partner of Old Blackheath agrees:

"Any time any fund closes redemptions it has to be a concern for the market. ... No matter what the manager claims, this is not about illiquidity. It's about pricing. The fund holds many publicly traded assets that currently have bids and offers. It's just that the manager doesn't want to sell at the prices offered, especially since the fund is already down 30 percent. ... That is not a reflection on bond market liquidity. That's manager judgment."

But Peter Kenny, an independent market strategist, believes the news has significant implications for market sentiment even if it's not indicative of the industry.

He wrote in an email: "Concern over bond market liquidity has emerged as a principal concern for analysts and investors alike in recent quarters. This closure may be a 'one off' but given the backdrop of concern on the Street, it will set off alarm bells and drive a heightened sense of bond-centric risk awareness. Certainly not a net positive for markets if this confirms a broader narrative."

The key takeaway may be not the liquidation itself, but what drove the underperformance of this fund.

A number of the fund's top 25 holdings are in the troubled energy and industrials sectors, according to Morningstar's website. As oil and commodity prices plunge in 2015, investors are becoming increasingly worried about the solvency of leveraged companies in those sectors.

The cost of buying default protection on the S&P/ISDA CDS U.S. Energy Select 10 Index is up by 185 percent since May, according to S&P Dow Jones Indices.

Legendary energy trader John Arnold confirmed to CNBC Thursday that he expects half of U.S. energy companies to go bankrupt next year if oil prices do not rebound.

Investors are clearly starting to get worried about the meltdown in junk bonds. U.S. high-yield bond funds saw a net redemption of $3.5 billion from retail investors for the week ended Dec.9, according to Lipper

S&P 500 vs. HYG YTD

Source: FactSet

The market in recent months diverged from the iShares iBoxx USD High Yield Corporate Bond ETF (HYG), but that changed this week. Another ETF tracking the asset class, the SPDR Barclays High Yield Bond ETF, is at it lowest level since the 2009 financial crisis.

"Debt-funded buybacks and mergers have been a massive source of demand for equities in recent years; a turn in the credit cycle has major implications for the broad stock market," Jesse Felder of the Felder Report wrote in an email.

Now 91, Whitman is operating as chairman of Third Avenue and all indications are he did not have a direct hand in managing assets in this particular fund.

If the drop in stocks Friday proved that Third Avenue's woes weren't priced into the market, a large default cycle by energy and industrial companies in 2016 certainly isn't accounted for either.

Read MoreArnold: Half of US energy industry may go under

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