Old Pro Plans to Clean Up When Market Crumbles

Wall Street is wringing its hands over the credit markets, and many observers are anticipating a spillover from the subprime trauma that has befallen a pair of Bear Stearns (BSC Quote) hedge funds.

But one man's doom and gloom is another man's opportunity. That's where Michael Heisley comes in. Heisley, the owner of the National Basketball Association's Memphis Grizzlies and a longtime investor in distressed assets, is betting that the market is headed for a fall, and he's about to put some of his funds to work.

"When you get way closer to the top and miles from the bottom, you're going to see a correction," Heisley tells TheStreet.com.

Fueled by cheap debt and easy lending terms, leveraged buyouts have helped drive a wave of mergers and acquisitions, but Heisley thinks the party is about to end.

"I've been doing this for 30 years, and this time it's no different," Heisley comments.

The veteran investor, who is among the 400 richest men in America according to Forbes, has formed Stony Lane Partners, with offices in New York and Chicago, to scout out future opportunities. He has also hired Jeff McDermott, the co-head of investment banking at UBS (UBS Quote), to help identify deals.

Heisley is planning to have as much as $1 billion to put to work in manufacturing and industrial companies. The investment vehicle represents his first concerted platform for investing in distressed opportunities since he formed Heico Companies in 1979.