Institutional Investor's Alpha Magazine - December 2007/January 2008 - (Page 32)

George Rizk rill, UBS and, most recently, Bear — it might not seem like the best time to be pouring money into the sector. But Rizk says plenty of moneymaking opportunities still exist. Speciﬁcally, he has turned his attention to non-U.S. deals, which already represent more than $500 million of the group’s portfolio. Rizk and his staff have inked two deals in Beijing — just the beginning of their push into Asia. He is also searching for an international manager, who will be based in the Hong Kong private equity ofﬁce D.E. Shaw opened last February and will be charged with building a team of two to three senior investment professionals. The real estate portfolio, which accounts for 4 percent of D.E. Shaw’s total assets, is one of a dozen strategies housed within the D.E. Shaw Composite Fund. Rizk says the ﬁrm has not put a cap on how much his group can invest and that money will be allocated as opportunities emerge. A dedicated real estate group may seem out of place at a ﬁrm best known for its quantitative hedge funds. But it is simply part of the expansion and diversiﬁcation efforts that have been going on at D.E. Shaw since the ﬁrm’s inception in 1988. David Shaw, who has a Ph.D. in computer science from Stanford University, taught at Columbia University in New York for six years before applying his mathematical expertise to the markets. Over the years his business ventures have ranged widely, from the 1995 creation of Juno Online Services, an early e-mail service provider, to D.E. Shaw Securities Group, which Shaw sold to Belgium’s KBC Bank in 1999 for $107 million. More recently, D.E. Shaw has been working to diversify its investment lineup by adding a handful of new business areas. In 2004 the ﬁ rm, which has 1,300 employees, launched Laminar Direct Capital, a unit dedicated to lending capital to businesses throughout North America, Latin America and Europe, followed in 2005 by the addition of traditional, long-only asset management. In 2006 it followed up with the rollout of a handful of 130/30 funds — a strategy where a fund manager sells short 30 percent of a fund’s assets and uses the proceeds to create a 130 percent long position. The ﬁ rm’s private equity investments have ranged from the February 2004 bailout of bankrupt toy retailer F.A.O. Schwarz to the funding of ethanol distilleries. D.E. Shaw is not the ﬁ rst hedge fund ﬁ rm to move into real estate. A number of competitors such as San Francisco–based Farallon Capital Management and New York–based D.B. Zwirn & Co. were early entrants into the asset class. Until recently, however, few hedge funds were willing to deal with the demanding tax and THERE ARE FEW MOMENTS TO PAUSE IN THE TRADING DAY. WINDOWS OF OPPORTUNITY OPEN AND CLOSE SO QUICKLY. STILL, WE LOOK AT OPPORTUNITIES NOT ONCE, BUT TWICE. AND SHOULD WE FEEL IT’S NECESSARY, WE’LL LOOK AGAIN. THIS IS INTEGRITY AT WORK. TRUE, WE PRIDE OURSELVES ON OUR DEEP TECHNICAL INSIGHT, BUT IN AN INDUSTRY WHERE SPEED IS PARAMOUNT, SO IS KNOWING JUST HOW AND WHEN TO REACT. TO LEARN MORE ABOUT KNIGHT CAPITAL GROUP (NASDAQ: NITE) GO TO KNIGHT.COM. © 2007 Knight Capital Group, Inc. All rights reserved. http://KNIGHT.COM

Table of Contents Feed for the Digital Edition of Institutional Investor's Alpha Magazine - December 2007/January 2008

Institutional Investor's Alpha Magazine - December 2007/January 2008 Contents Letter from the Editor Longs & Shorts Pension Corner: Liberal Returns The Good Guy: Inner-city MVP Cover Story: Marathon Men Interview: Rizk Management Profile: Living on Hostile Ground Profile: Buy and Hold In Theory: The Fallacy of Portable Alpha Strategies: Changing Course Alpha Bytes: Behind the Scenes Unhedged: Commentary: An Activist Alternative

Institutional Investor's Alpha Magazine - December 2007/January 2008

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.