How can a big hedge fund firm keep growing when markets are
rocky - and investors want more disclosure?
By Carolyn Sargent
D. E. Shaw has worked for years to expand beyond its
model-driven quantitative strategies, but to many investors
it's still a black box. The firm's penchant for secrecy, along
with the multistrategy fund's worst results ever, led to such
substantial investor redemptions that the firm nearly had to
invoke its 6.25% gate last year.
"We are redeeming because of the opacity," explains one
longtime Shaw investor. Saying that he is deeply dissatisfied
with the answers he receives from Shaw about the Composite's
holdings, he adds: "It is not a necessary risk for us to take."
It is his responsibility, he says, to get a handle on the
components and risks in his own book.
Such comments illustrate that when funds are earning the
healthy returns D. E. Shaw...