DE Shaw: Inside Manhattan’s ‘Silicon Valley’ Hedge Fund
Secretive group mixes quant investing with common sense, but is fighting to keep its $50bn edge
By Robin Wigglesworth
In 1988, Revolution Books, a tatty Communist bookstore near New York’s Union Square, got some strange new upstairs neighbours: a bunch of geeky programmers trying to crack the code to financial markets.
In the early days, the embryonic hedge fund founded by David Shaw, a former computer science professor at Columbia University, was a ramshackle start-up. Exposed pipes and extension cords meant that tripping on a cable could take out its entire trading system. Yet today DE Shaw is one of the hedge fund industry’s biggest players, managing over $50bn of assets.
It has enjoyed some mainstream fame as the place where a young Jeff Bezos first worked on what would ultimately become Amazon. But most importantly for a wider investment industry desperately trying to reinvent itself for the 21st century, DE Shaw has evolved dramatically from the algorithmic, computer-driven “quantitative” trading it helped pioneer in the 1980s.
It is now a leader in combining quantitative investing with traditional “fundamental” strategies driven by humans, such as stockpicking. This symbiosis has…
