Durus Bails Out of Various Medical Holdings

Meanwhile, Durus is preventing its own investors from withdrawing their money from the hedge fund. The fund is under investigation by the Securities and Exchange Commission and the Nasdaq. A group of investors in early September replaced the board of one of the hedge fund's investment units.

Tracking up-to-date Durus investments is difficult because federal securities law requires hedge funds to file financial statements quarterly with the SEC. Judging from past practices, it will take Durus five or six weeks to give an accounting of its trading during the quarter that ended Sept. 30.

But other SEC documents show significant selling of shares in several companies, such as Allos Therapeutics (ALTH - Cramer's Take - Stockpickr), of Westminster, Colo., which had been Durus' third-largest investment in terms of percentage ownership.

According to Allos' April proxy, Durus had acquired 5.9 million shares, or 23%, to become the largest institutional shareholder in the developer of drugs to improve the efficacy of chemotherapy and radiation treatments for cancer patients.

By the end of June, Durus had cut its stake to 4.1 million shares, or 15.8%. Then, in a flurry of activity, Durus made 35 transactions selling shares (as well as three small purchases) to cut its stake down to 1.25 million shares, or 4.8%, by Aug. 19, according to the latest SEC filings.

Allos has been a poor investment for Durus. One SEC filing shows that between July 23, 2001 and Aug. 19, 2003, Durus purchased 7.73 million shares for $51.6 million and sold 6.48 million shares for $26.2 million -- a loss of $25.4 million. Allos' stock is down 59% since the beginning of the year.

Durus also has a rapidly shrinking stake in Novoste (NOVT - Cramer's Take - Stockpickr), which makes and sells a device that produces radiation to help reduce the reclogging of arteries. By March 31, Durus owned 1.74 million shares, or 10.6%, of the Norcross, Ga.-based company. At the time, Durus was the second-largest institutional shareholder.