Shaw stumbles, and investors take a hike

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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