Qualitative Strategies

The D. E. Shaw group’s qualitative strategies are an increasingly important part of the firm’s operations. For example, the firm is a major investor in the distressed securities-related market, where it attempts to exploit opportunities arising from dislocations in the corporate credit markets by identifying inefficiently priced securities and other interests of companies experiencing various forms of distress.

Additional examples of the firm’s qualitative strategies include its long/short equities and energy-related strategies. The long/short equities strategy focuses predominantly on the rigorous fundamental analysis of individual companies. The energy group conducts qualitative and quantitative analysis to identify inefficiently priced instruments related to the global energy markets; trading a range of products from oil, natural gas, and power to innovative products such as tolling agreements for power plants.

Furthermore, building on its previous experience in principal investments, both in its acquired businesses and in its own internal venture activities, the firm pursues investments in private equity and venture capital, focusing on sectors that are expected to benefit from the technological and financial expertise of the firm’s professional staff. The firm’s flexible investment approach accommodates both control and minority positions in established companies and selected venture capital investments.

Another important component of the firm’s private investment activities is Laminar Direct Capital, an affiliate of the D. E. Shaw group that provides creative capital solutions (including senior, mezzanine, and convertible debt, and preferred and common equity) to public and private entities.

In the risk management and portfolio optimization processes within these strategies, the firm employs techniques used successfully in its quantitative investments. In particular, the firm seeks to measure and, where practical, minimize its exposures to various forms of financial risk.