D.E. Shaw
From Free net encyclopedia
The D. E. Shaw Group is a New York-based investment and technology development firm whose activities center on various aspects of the intersection between technology and finance. Based in Times Square, it was founded by David Shaw (a former associate professor of computer science at Columbia University) in 1988, and currently holds approximately US $19 billion in aggregate capital over a number of different entities.
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.
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. Its most famous former employee is Jeff Bezos, who was a vice president at D. E. Shaw before departing to found Amazon.com.
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 other hedge funds, suffered significant losses in its fixed-income trading. Bank of America took a $370,000,000 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. In December of 2003, a subsidiary of one of the D. E. Shaw group funds acquired famed toy store FAO Schwarz, which is 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.
Employment opportunities at D.E. Shaw are known to be extremely competitive, with less than one applicant in 500 being offered a position. Employees are regarded as being among the world's most gifted in their fields.