Analysts who cover initial public offerings had little enthusiasm for first-quarter deals for debt-laden companies like hospital chain HCA Holdings Inc and pipeline operator Kinder Morgan Inc .

But up-and-coming Chicago hedge fund manager Anand Parekh saw value in proven businesses throwing off hefty cash flows.

In the first quarter, Parekh bought stakes in HCA, Kinder Morgan, Nielsen Holdings and others that were going public after having been taken private in leveraged buyout deals over the past few years.

That made Parekh's Alyeska Investment Group the top buyer of IPO stakes in the Smart Money 30 group of some of the largest stock-picking hedge funds, according to data compiled by Thomson Reuters.

And so far, most of the bets are paying off for Alyeska, a fund that maintains a lower public profile than some of its competitors. HCA is up 17 percent from its IPO price and Nielsen is up 37 percent. Kinder has slipped 4 percent.

Parekh, who opened Alyeska in early 2008, follows a market neutral strategy that sells stocks short as well as buying long positions. The firm, which manages $2.5 billion to $3 billion, does not disclose its short positions, and Parekh declined to comment.

MARATHON MAN

The fund's impressive growth in assets has been driven by steady, positive returns every year since it started, a record that has gained attention considering the stock market's sharp declines in late 2008 and early 2009.

Parekh, a 38-year-old from northern New Jersey, is an avid runner who has competed in a number of marathons, including Chicago several times. His best Chicago time was 3:21:16 in 2006.

The Alyeska fund is named after an Aleut word that means big country and that gave the state of Alaska, where Parekh's wife grew up, its name.

Parekh has attracted strong talent while instilling a disciplined investment style and firm risk controls, according to a person familiar with the fund who was not authorized to speak publicly.

Before starting his fund, he gained a reputation as a savvy investor at Citadel Investment Group, where he was global head of equities. Before joining Citadel in 2003, he headed North American structuring for credit and interest-rate products at Deutsche Bank and was earlier in charge of risk management in the bank's London office.

Parekh, who graduated from the University of Michigan with degrees in English and mathematics, is discerning about who invests in the fund and those he hires.

He's a very dynamic individual who draws people to him, said a former colleague who was close to Parekh. He's very thoughtful about how to build an organization and how people can fit together. And he is able to keep different people who have high aspirations (and) inspire (them) to work together in a team format.

MANY IPOS

Alyeska's long positions are mostly liquid, large-cap stocks in a portfolio of about 260 securities including options, according to its latest filings with the U.S. Securities and Exchange Commission.

The fund added four big new names in the first quarter. The largest was Genzyme Corp, which was acquired by pharmaceutical giant Sanofi SA in April. Other top new additions were insurer MetLife Inc , HCA and drugmaker Pfizer Inc

. Alyeska increased large stakes in Walt Disney Co and Target Corp as well.

An examination of Alyeska's first-quarter holdings showed the fund bought into a number of initial public offerings that were backed by private equity, a strategy that has proven successful, according to research by Thomson Reuters.

Private equity-backed companies that went public returned, on average, 52 percent to investors, compared with a 35 percent return for IPOs that were not backed by private equity.

Since 2009, almost half of the 204 IPOs without private equity backing traded below their offering price. But only 20 percent of the companies taken public by private equity sponsors have dipped below their IPO price.

A person familiar with Alyeska said Parekh does not explicitly seek out so-called reverse LBO IPOs. Instead, fundamental research drives individual stock selection at Alyeska, the source said.

Of the 19 companies Thomson Reuters identified as private equity-backed IPOs, only HCA was big enough to be among Alyeska's top 10 holdings. A number had market caps of less than $1 billion, and Alyeska's stake was small.

Reverse LBO IPOs shine thanks to the strong management teams private equity firms recruit to run the businesses, said Rick Fearon, a former executive at private equity firm Allied Capital who later founded hedge fund Accretive Capital Partners in Madison, Connecticut. The companies also typically get a sharp makeover while they are still private.

These initiatives often provide sustainable comparative and competitive advantages, creating a moat around the business which benefits new shareholders as well, Fearon said.

(Reporting by Herbert Lash; editing by Aaron Pressman and John Wallace)