Morgan Stanley Eyes Avenue

Morgan Stanley(MS Quote - Cramer on MS - Stock Picks) continues to do some window-shopping along hedge fund row.

The Wall Street Journal says the big Wall Street firm is now looking at buying a 20% equity stake in Avenue Capital Group, a hedge fund that specializes in buying and selling distressed bonds. Morgan Stanley and Avenue Capital, a fund with $12 billion in assets, reportedly are in advanced talks.

News of Morgan Stanley's interest in Avenue Capital comes just days after the Wall Street firm renewed talks with another hedge fund, FrontPoint Partners, about buying an equity stake. It's not clear if Morgan Stanley is pursuing a deal with Avenue Capital in lieu of a transaction with FrontPoint.

Morgan Stanley, which is a Wall Street leader in proving prime brokerage services to hedge funds, is trying to bulk up its hedge fund offerings for its customers, as well as attract new business.

In recent years, a number of Wall Street firms, such as J.P. Morgan Chase(JPM Quote - Cramer on JPM - Stock Picks) and Lehman Brothers(LEH Quote - Cramer on LEH - Stock Picks), have purchased stakes in a several big hedge funds.