Hedge Fund D.E. Shaw & Co: 13F Filing Q4 2008 ~ market folly

Tuesday, April 21, 2009

Hedge Fund D.E. Shaw & Co: 13F Filing Q4 2008

This is the 4th Quarter 2008 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out the Hedge Fund 13F filings preface.

Next up is D.E. Shaw & Co. D.E. was founded in 1988 by David E. Shaw and manages around $33 billion as of December 1st 2008. They focus on intertwining technology and finance and are a hedge fund, private equity firm, and technology development shop all in one. They employ mainly quantitative strategies and do a lot of statistical arbitrage. Shaw oversees strategic maneuvers at the firm, but no longer is active in the day to day operations. He received his Ph.D. from Stanford University. Shaw also was recently seen on Forbes' billionaire list, as well as the list for Top 25 highest paid hedge fund managers for 2008. Some notable former employees include Jeff Bezos (before founding Amazon.com) and Lawrence Summers, who left the firm to serve on President Elect Obama’s economic team. Shaw has had a decent year thus far, seeing their Composite fund +0.8% for March and sitting at +5.59% year to date (through 3/31/09) as detailed in our March hedge fund performance numbers update. In terms of somewhat recent activity, we had noted their activity in Orient- Express Hotels (OEH) back in January, in an ongoing saga.

In Alpha's hedge fund rankings, D.E. Shaw is ranked 6th in the world. Taken from their website, they invest “in a wide range of companies and financial instruments within both the major industrialized nations and a number of emerging markets. Its activities range from the deployment of investment strategies based on either mathematical models or human expertise to the acquisition of existing companies and the financing or development of new ones.” Lastly, for those of you potentially interested in working at such an outfit, check out some of their past interview questions.

Disclaimer: Do note that tracking DE Shaw through 13F filings is not beneficial due to the quant nature of their firm. We are tracking them because they are a popular, prominent fund with solid returns and many readers continually request it. While the majority of funds we cover are appropriate for tracking given their strategy and research methods, there is no way for us to know the exact rhyme or reason behind DE's positions. So, we are simply posting this up for fun. Use this information for entertainment purposes only.

The following were their long equity, note, and options holdings as of December 31st, 2008 as filed with the SEC. We have not detailed the changes to every single position in this update, but we have covered all the major moves. All holdings are common stock unless otherwise denoted.

Some New Positions (Brand new positions that they initiated in the last quarter):
Ventas (VTR), Apogent Tech (inactive), Essex Property Trust (ESS), US Bancorp (USB) Bond, Encana (ECA), Wendys/Arbys (WEN), Sybase (SY) Bond, Gilead (GILD) Bond, PSS World Medical (PSSI) Bond, Burlington Northern (BNI) Puts, Danaher (DHR), Medco Health (MHS), Best Buy (BBY) Bond, Occidental Petroleum (OXY) Puts, Dicks Sporting Goods (DKS) Bond, Kohls (KSS), Cliffs Natural Resources (CLF), Highwoods (HIW), Symantec (SYMN) Bond, Jones Lang Lasalle (JLL), Royal Dutch Shell (RDS-A), Senior Housing Properties (SNH), OReilly Automotive (ORLY), World Fuel Services (INT), L3 Communications (LLL), Ebay (EBAY) Puts, Dupont (DD) Puts, Kilroy Realty (KRC), NV Energy (NVE), & Hewitt Associates (HEW)

Some Increased Positions (A few positions they already owned but added shares to)
Abbott Laboratories (ABT): Increased by 467%
Bank of America (BAC) Calls: Increased by 110%
Apple (AAPL) Puts: Increased by 102%
Qualcomm (QCOM): Increased by 45%
Walmart (WMT): Increased by 28%
Laboratory Corp (LH) Bond: Increased by 20%
Abraxis Bioscience (ABII): Increased by 13%
Warner Chilcott (WCRX): Increased by 11%

Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Exxon Mobil (XOM): Reduced by 65%
Equity Residential (EQR): Reduced by 60%
Burlington Northern (BNI): Reduced by 45%
Union Pacific (UNP): Reduced by 44%
Pfizer (PFE): Reduced by 33%
News Corp (NWS-A): Reduced by 31%
Cephalon (CEPH): Reduced by 26%
Coca Cola (KO): Reduced by 20%
Mastercard (MA): Reduced by 19%
Anadarko Petroleum (APC): Reduced by 14%

Removed Positions (Positions they sold out of completely)
Anheuser Busch (BUD), Merill Lynch (MER) Calls & Puts, Symantec (SYMC), Procter & Gamble (PG) Puts, CA (CA), DRS Tech (inactive), Imclone (IMCL), Prudential (PRU) Bond, Allied Waste (AW), SLM (SLM), Lehman Brothers (LEHPQ) 7.25% Preferred, Nabors (NBR) Note, Autozone (AZO), Invitrogen (IVGN), Mylan (MYL-PA), Anheuser Busch (BUD) Calls, Everest RE group (RE), Wrigley (inactive), Nationwide Health (NHP-PB), Barr Pharma (BRL), Coca Cola (KO) Puts, Hutchinson Tech (HTCH) Note, Best Buy (BBY), Brookfield Asset Management (BAM), Developers Diversified (DDR), Kimco (KIM), Grey Wolf (GW), & Sierra Pacific (SRP)

Top 15 Holdings (by % of portfolio)

  1. Endo Pharma (ENDP): 1.25% of portfolio
  2. Vertex Pharma (VRTX): 1.23% of portfolio
  3. Warner Chilcott (WCRX): 1.19% of portfolio
  4. Pfizer (PFE): 0.97% of portfolio
  5. Goldman Sachs (GS) Calls: 0.9% of portfolio
  6. Google (GOOG) Calls: 0.87% of portfolio
  7. Mylan (MYL): 0.87% of portfolio
  8. Owens Corning (OC): 0.83% of portfolio
  9. Qualcomm (QCOM): 0.8% of portfolio
  10. Walmart (WMT): 0.78% of portfolio
  11. Mastercard (MA) Calls: 0.72% of portfolio
  12. Anadarko Petroleum (APC): 0.67% of portfolio
  13. AvalonBay Communities (AVB): 0.64% of portfolio
  14. Davita (DVA): 0.6% of portfolio
  15. Coca Cola (KO) Calls: 0.6% of portfolio

Again, please keep in mind that since Shaw is quant in nature, we aren't going to attempt to explain the rationale behind their holdings. Also note that they literally hold a ton of positions. After all, their top holding makes up ony 1.25% of their entire portfolio. They have numerous positions that only comprise of < href="http://www.marketfolly.com/2009/02/hedge-fund-portfolio-tracking-q4-2008.html">portfolio tracking series in which we're tracking 35+ prominent funds. We've already covered:

We cover a new hedge fund each day and you can see the complete list of hedge fund portfolios here.

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