D. E. Shaw & Co.

D. E. Shaw & Co., L.P.

Type	Private
Industry	Hedge fund, Private Equity
Founded	1988
Headquarters	New York City, New York
Key people	David E. Shaw
AUM	US$15.6 billion[1]
Employees	1300[2]
Website	www.deshaw.com

D. E. Shaw & Co., L.P. is an American-based global investment management firm founded in 1988 by David E. Shaw and based in New York City.^[3] The firm's trading mode is systematic and computer-driven.^[3]

Investment Strategy

The company manages hedge funds ^[4] that make extensive use of quantitative methods and proprietary computational technology to manage its investments.^[2][5][6] In conjunction with such methods, the Company also uses qualitative analysis to make private equity investments in technology, wind power, real estate, and financial service firms and in distressed company financing.^{[citation needed]}In addition to its financial businesses, D. E. Shaw & Co. has provided private equity capital to technology-related business ventures, including Juno Online Services, an Internet access provider.^[7]

History

In 1997, the firm returned capital to most of its early investors in favor of a structured credit facility of nearly $2 billion from Bank of America, with terms that allowed D.E. Shaw & Co. to keep a higher fraction of profits than hedge fund investors normally allow.^{[citation needed]} After the Russian debt default in 1998, the company suffered losses in its fixed-income trading as did many hedge funds.^{[citation needed]}

Several of D. E. Shaw & Co.'s publicly reported transactions have involved investments in bankrupt companies.^{[citation needed]} In December 2003, a subsidiary of one of the company's funds acquired the toy store FAO Schwarz, which reopened for business in New York and Las Vegas in the fall of 2004. In the same year, D. E. Shaw affiliate, Laminar Portfolios, acquired the online assets of KB Toys, which continued operating as eToys.com.^[8] In August 2004, D. E. Shaw & Co., along with MIC Capital, proposed to inject $50M into the bankrupt WCI Steel. In December 2004, D.E. Shaw & Co. bought 6.6% of USG Corp, a wallboard manufacturer seeking bankruptcy protection as a result of rising asbestos liabilities.^{[citation needed]}

In 2006, Lawrence Summers became managing director at D.E. Shaw & Co. and left in 2008, receiving $5.2 million in compensation for that period.^[9]

Financial Crisis

In late 2009 during the Financial Crisis it was reported that D.E. Shaw & Co. had set up a Portfolio Acquisitions Unit, the aim of which was to acquire illiquid assets from rival hedge funds.^[10]

Corporate Affairs

The firm was founded by David E. Shaw, a former Columbia University faculty member and has more than 1,300 employees.^[2] The company has managed up to $40 billion in aggregate capital^[1][11] and in 2011 had $15.6 billion in assets under management and was ranked as the 21st largest hedge fund by Institutional Investor.^{[1][12][12][13]}

Management

David Shaw directed the company from 1988 to 2001 however, by 2010, the firm's management structure had evolved into a six member executive committee.^[2][14]

Company Ownership

In 2007, David Shaw sold a 20% minority stake in the Shaw group to Lehman Brothers, as part of a broader strategy to diversify his personal holdings.^{[citation needed]} At the time of its bankruptcy in September 2009 Lehman Brothers Holdings Inc., had holdings in D.E. Shaw & Co.^[15]

Corporate Responsibility

D. E. Shaw supports educational programs such as Math-M-Addicts (teachers are D. E. Shaw & Co. employees),^{[citation needed]}American Regions Mathematics League.^[16] Worldwide Online Olympiad Training (WOOT), United States of America Mathematics Olympiad and the International Mathematics Olympiad, Mathematical Olympiad Program, the MIT 6.370 Battlecode Competition,^[17] and The Center for Excellence in Education.^[18]

Offices

• Hong Kong - Opened 2007 to focus on Chinese Private Equity^[19]
• India - largest office with 700 employees after US^[19]
• Shanghai - 2010^[19]
• Tokyo - 2010^[19]

Alumni

• Lawrence Summers
• Jeff Bezos
• Douglas Faneuil

References

1. ^ ^{a b c} "The 2011 Hedge Fund 100 Ranking". Institutional Investor, Inc.. May 12, 2011. http://www.institutionalinvestor.com/Research/3196/Hedge-Fund-100-Ranking.html. 
2. ^ ^{a b c d} Jones, Sam (28 September 2010). "DE Shaw cuts 10% of workforce". Financial Times. 
3. ^ ^{a b} Mackintoshin, James (April 30, 2007). "DE Shaw considers new private equity fund". Financial Times. 
4. ^ Nayer, Suchita (10 January 2010). "DE Shaw's new fund nods to hedge fund worries". Financial Times. 
5. ^ Computing in Science and Engineering
6. ^ ISM Seminar abstract
7. ^ Rose-Smith, Imogen (27 Feb 2007). "Cracking The Code". Institutional Investor. http://www.institutionalinvestor.com/Popups/PrintArticle.aspx?ArticleID=1242202. Retrieved 10 August 2011. 
8. ^ "D.E. Shaw Affiliate Acquires Online Assets of KB Toys" MultiChannelMerchant, May 14, 2004.
9. ^ McKinnon, John (April 4, 2009). "Hedge Fund Paid Summers $5.2 Million in Past Year". Wall Street Journal. http://online.wsj.com/article/SB123879462053487927.html. Retrieved April 4, 2009. 
10. ^ Jones, Sam (February 8, 2010). "DE Shaw Eyes Rival Firm's Distressed Holdings". Financial Times. 
11. ^ "Hedge Fund 100 Ranking"
12. ^ ^{a b} The D. E. Shaw group - Who We Are
13. ^ "Wall Street's King Quant David Shaw's Secret Formulas Pile Up Money. Now He Wants a Piece of the Net.", February 5, 1996, Fortune magazine
14. ^ "Rebounding from Near Death - World’s Largest Hedge Funds Have Their Sights Firmly On Institutional Dollars". Institutional Investor, Inc.. May, 2010. 
15. ^ Kishan, Saijel (18 February 2009). "Hedge Funds Pressed to Consolidate as Losses Cut Fees". Bloomberg. http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a4GzjRhLf93A. Retrieved 26 July 2011. 
16. ^ "American Regions Mathematics League". 1 August 2011. http://www.arml.com. 
17. ^ "MIT Battlecode website". http://battlecode.mit.edu/. Retrieved 1 August 2011. 
18. ^ "Center for Excellence in Education". http://www.cee.org/get-involved/corporate/sponsor-logos. Retrieved 1 August 2011. 
19. ^ ^{a b c d} Jones, Sam (10 March 2010). "DE Shaw broadens Asian reach". Financial Times. 

External links

• D. E. Shaw & Co. Website
• Alpha Magazine's profile of D.E. Shaw & Co. (2009)