D. E. Shaw & Co.

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Type	Private
Founded	1988
Headquarters	New York City, New York
Key people	David E. Shaw
Industry	Hedge fund, Private Equity
Website	http://www.deshaw.com/

D. E. Shaw & Co. is a New York-based hedge fund, private equity ^[2] and technology development firm whose activities center on various aspects of the intersection between technology and finance. Based in New York City, New York, it was founded by David E. Shaw, who was formerly a faculty member in the computer science department at Columbia University. The firm through various affiliates, specializes in applying quantitative and qualitative trading strategies to hedge fund management and other investments. It makes private equity investments in early-stage and established firms involved in technology, health care, and financial services. It also acquires assets of distressed companies. The company's D.E. Shaw Research unit focuses on long-term scientific and technological projects. As of 2006, the company, described by Fortune in 1996 as "the most intriguing and mysterious force on Wall Street,"^[3] manages approximately US $35 billion in aggregate capital over a number of different entities.^[4]

1 History
2 Employment
3 Offices
4 Educational sponsorship
5 References
6 External links

[edit] 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 Shaw to keep a higher fraction of profits than hedge fund investors normally allow. Bank of America merged with Nationsbank soon thereafter, and in the banks' due diligence for their merger, David Coulter, the CEO of Bank of America, said that his firm had no hedge fund exposure. After the Russian debt default in 1998, Shaw, like Long-Term Capital Management and many other hedge funds, suffered significant losses in its fixed-income trading. Bank of America took a $370 million writedown, Coulter lost his job, and the new management of the bank later declined its option to renew the credit facility.

Shaw suffered a couple of lean years thereafter, but attracted new investors as its investment performance recovered.

Many of D. E. Shaw's recent headline-making transactions deal with investing in bankrupt companies with valuable assets.^{[citation needed]} In December of 2003, a subsidiary of one of the D. E. Shaw group funds acquired famed toy store FAO Schwarz, which reopened for business in New York and Las Vegas in the fall of 2004. D. E. Shaw also gained control of KB Toys. In August of 2004, D. E. Shaw along with MIC Capital, proposed to inject $50M into the bankrupt WCI Steel. In December of 2004, Shaw bought 6.6% of USG Corp, a wallboard manufacturer seeking bankruptcy protection as a result of rising asbestos liabilities.

Lawrence Summers, who served as Secretary of the Treasury during the Clinton administration and in 2006 resigned as president of Harvard University, is now a managing director at D.E. Shaw. Summers helped negotiate a bailout of hedge fund Long-Term Capital Management in 1998.^{[citation needed]}

In addition to its financial businesses, the D. E. Shaw group has also provided private equity capital to technology-related business ventures, most famously to Juno Online Services, which grew to become one of the nation’s largest Internet access providers.

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 own holdings.

[edit] Employment

The D. E. Shaw group is known for its quantitative investment strategies, particularly statistical arbitrage, and its rigorous recruiting policies, which especially target the math and science departments of major universities. Notable employees include former employee Jeff Bezos, who was a vice president at D. E. Shaw before departing to found Amazon.com, and now managing director Lawrence Summers.

As of 2007, D.E. Shaw employs more than 1300 people. ^[5] Employment opportunities at D. E. Shaw are known to be extremely competitive, with only one applicant in several hundred being offered a position.^[6] The staff of D. E. Shaw includes multiple Rhodes, Marshall, and Fulbright Scholarship winners, more than 20 International Math Olympiad medalists, Putnam winners, national chess champions and other world-class researchers and practitioners from a wide range of scientific, humanities, and social science disciplines.^{[citation needed]} The firm is particularly known for its diverse hiring practices, generally favoring those from non-MBA programs.

[edit] Offices

Bermuda
Gurgaon
Hong Kong
Houston

Hyderabad
Kansas City
London
Los Angeles
Mumbai

New York City
San Francisco
Silicon Valley
Washington, D.C.

[edit] Educational sponsorship

As a hedge fund built around traders and quants with heavy mathematics and problem solving backgrounds, D. E. Shaw supports several major educational programs:

American Regions Mathematics League (ARML) -- a national mathematics competition for top high school math students.^[7]
Worldwide Online Olympiad Training (WOOT) program -- A program training students in proof-writing and problem solving en route to participation in the United States of America Mathematics Olympiad and the International Mathematics Olympiad. D. E. Shaw's sponsors enrollment for students invited to the prestigious Mathematical Olympiad Program.
MIT 6.370 Battlecode Competition -- A programming competition where teams compete to create the best strategic AI. ^[8]