Institutional Investor's Alpha Magazine - March 2009 - (Page 32) Profile Story D.E. Shaw of Funds Cover Chicago Funds THE POWER OF The masterminds at hedge fund giant D.E. Shaw think they’ve found the formula for thriving during troubled times. By Michael Peltz F ew hedge fund firms have a more well-deserved reputation for secrecy than D.E. Shaw & Co. Founded two decades ago by David Shaw, then a computer science professor at Columbia University, the outfit was an early pioneer in quantitative investing — developing sophisticated computer programs to identify and profit from anomalies in the market. Like Coca-Cola Co., which zealously guards the formula for its prized syrup, D.E. Shaw has always vigilantly protected its proprietary trading algorithms. So secretive was the firm during its first few years that some employees wouldn’t even tell their families where they worked, let alone what they were doing there. “There’s a healthy paranoia that we have in the firm,” says managing director Eric Wepsic, 39, who oversees quantitative trading strategies. That attitude has served it well. By rigorously protect- S 32 • INSTITUTIONAL INVESTOR’S ALPHA • MARCH 2009
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