D. E. Shaw & Co.

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D E Shaw & Co, LP
Type Limited partnership
Industry Investment management
Founded 1988
Headquarters 1166 Avenue of the Americas
New York City, New York, U.S.
Key people David E. Shaw
Products Hedge fund, private equity
AUM US$30 billion (as of Mar 1, 2012)[1]
Employees 1300+
Website www.deshaw.com

D. E. Shaw & Co., L.P. is an America-based global investment management firm founded in 1988 by David E. Shaw and based in New York City.[2] The firm has offices in Hong Kong, India, Shanghai and Tokyo. In 1997, the Bank of America allowed D.E. Shaw & Co. to keep a higher fraction of profits than hedge fund investors normally allow. The company has made investments in technology, wind power, real estate, and financial services firms. The subsidiaries of the company acquired the toy store FAO Schwarz and eToys.com.

History[edit]

The firm was founded by David E. Shaw, a former Columbia University faculty member and has more than 1,300 employees.[3] David Shaw directed the company from 1988 to 2001 but by 2010, the firm's management structure evolved into a six member executive committee.[3][4]

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.[5] After the Russian debt default in 1998, the company suffered losses in its fixed-income trading.[6]

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.[7] 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.[8]

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] 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]

In 2007, David Shaw sold a 20% minority stake to Lehman Brothers, as part of a broader strategy to diversify his personal holdings.[11] At the time of its bankruptcy in September 2008, Lehman Brothers Holdings Inc. had holdings in D.E. Shaw & Co.[12]

Investment Strategy[edit]

The company manages a variety of investment funds[13] that make extensive use of quantitative methods and proprietary computational technology to support fundamental research in the management of its investments.[3][14][15] The Company also uses qualitative analysis to make private equity investments in technology, wind power, real estate, and financial services firms and in distressed company financing.[16] 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, and Farsight, an online financial services platform that was acquired by Merrill Lynch.[17] The company has $40 billion in aggregate capital[18][19] and in 2011 had $15.6 billion in hedge fund assets under management and was ranked as the 21st largest hedge fund by Institutional Investor.[18][20][21]

Corporate Responsibility[edit]

D. E. Shaw supports educational programs such as Math-M-Addicts (teachers are D. E. Shaw & Co. employees),[22] American Regions Mathematics League, [23] 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,[24] and The Center for Excellence in Education.[25]

Offices[edit]

  • Hong Kong - Opened 2007 to focus on Chinese private equity[26]
  • India - largest office with 600 employees after US[26]
  • New York - headquarters
  • Shanghai - 2010[26]
  • Tokyo - 2010[26]

See also[edit]

References[edit]

  1. ^ Doom, Justin. (2014-02-18) Shaw Joins KKR Buying Cleaner Energy Rivals Won’t Touch. Bloomberg. Retrieved on 2014-04-04.
  2. ^ Mackintoshin, James (April 30, 2007). "DE Shaw considers new private equity fund". Financial Times. 
  3. ^ a b c Jones, Sam (28 September 2010). "DE Shaw cuts 10% of workforce". Financial Times. 
  4. ^ "Rebounding from Near Death - World’s Largest Hedge Funds Have Their Sights Firmly On Institutional Dollars". Institutional Investor, Inc. May 2010. 
  5. ^ Derivatives Strategy (February 1998). "Inside D. E. Shaw". Derivatives Strategy Magazine. Retrieved 8 June 2013. 
  6. ^ The Battle for Wall Street: Behind the Lines in the Struggle that Pushed an Industry into Turmoil, Richard Goldberg Pub. John Wiley & Sons, 2009
  7. ^ "D.E. Shaw Affiliate Acquires Online Assets of KB Toys" MultiChannelMerchant, May 14, 2004.
  8. ^ http://www.buyandhold.com/StockMgr?request=display.content&ContentURL=%2Fcustom%2Fbuyandhold-com%2Fhtml-secFilings.asp%26&symbol=USG&symb=USG&sequenceid=1&guid=5727891
  9. ^ McKinnon, John (April 4, 2009). "Hedge Fund Paid Summers $5.2 Million in Past Year". Wall Street Journal. Retrieved 4 April 2009. 
  10. ^ Jones, Sam (February 8, 2010). "DE Shaw Eyes Rival Firm's Distressed Holdings". Financial Times. Retrieved 5 December 2013. 
  11. ^ "Lehman Buys Into D.E. Shaw" The Wall Street Journal, March 14, 2007
  12. ^ Kishan, Saijel; Keehner, Jonathan (18 February 2009). "Hedge Funds Pressed to Consolidate as Losses Cut Fees". Bloomberg. Retrieved 5 December 2013. 
  13. ^ D.E. Shaw & Co. website D. E. Shaw & Co. Website
  14. ^ Computing in Science and Engineering
  15. ^ ISM Seminar abstract
  16. ^ "Power of Six: Profile of D.E. Shaw & Co." (PDF). Alpha Magazine. 2009. 
  17. ^ Rose-Smith, Imogen (27 Feb 2007). "Cracking The Code". Institutional Investor. Retrieved 10 August 2011. 
  18. ^ a b "The 2011 Hedge Fund 100 Ranking". Institutional Investor, Inc. May 12, 2011. 
  19. ^ "Hedge Fund 100 Ranking"
  20. ^ The D. E. Shaw group - Who We Are
  21. ^ "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
  22. ^ "Math-M-Addicts: TEACHERS". 21 July 2014. 
  23. ^ "American Regions Mathematics League". 1 August 2011. 
  24. ^ "MIT Battlecode website". Retrieved 1 August 2011. 
  25. ^ "Center for Excellence in Education". Retrieved 1 August 2011. 
  26. ^ a b c d Jones, Sam (10 March 2010). "DE Shaw broadens Asian reach". Financial Times. 

External links[edit]