One of the largest hedge-fund firms is slashing 150 jobs after losing more than half of its hedge-fund assets since the financial crisis. D.E. Shaw & Co. is cutting about 10% of its work force, among the largest cutbacks in recent memory among major hedge-fund firms. A pioneer in computer-driven investing, the firm in recent years expanded into other areas, such as real estate and private equity. Firm-wide assets have fallen to about $21 billion from nearly $40 billion in 2008, according to a person familiar with the matter. Hedge-fund assets are down to $17 billion from about $35 billion. “The D.E. Shaw group has taken steps to strengthen our business and maximize value for our investors over the long term,” a spokesman said.
It looks like they are cleaning house to make room for Larry Summers. As you may recall, they paid Summers $5 million a year in 2006 and 2007 to do nothing except look pretty in front of clients. I reported this last year in my article, The Wall Street-Washington Financial Complex:
Mr. Summers and Shaw executives say his role there was to be a sounding board for Shaw’s traders. But interviews with friends and former colleagues suggest that Mr. Summers’s role at D. E. Shaw was wider and more complex.
Mr. Summers, these people say, was a marquee hire, a prized spokesman for Shaw. He routinely made himself available for private consultations with Shaw’s clients, an attractive perk for investing with the firm, as one client put it.
Mr. Summers, who taught economics and public policy at Harvard while advising Shaw, also met with investors in the United States, as well as in the cash-rich Middle East and Asia. He spoke at industry conferences, mixing with officials from public pension funds, endowments and other large institutions with many billions of dollars to invest. …
I wonder what his advice to Shaw’s clients was? Did he warn them of the impending bust? I doubt it. I am sure they weren’t paying him to spread bad news.
But here is Summers again, tired out from his stint in the Obama Administration, ready to go back to Harvard and lead the life of the intellectual academic, enlightening young minds. Don’t bet on it. I’ll wager that he’s ready to cash in and make some serious money on Wall Street.
This is the revolving door between Wall Street and Washington in action.