D.E. Shaw’s top 30 long-term stock picks managed to beat the market by 2.8 percentage points since the end of 2010. Here is our article about how to determine large quant funds’ longer term stock picks:
D.E. Shaw & Co, founded in 1988 by David Elliot Shaw, is one of the largest quant funds in the world. Its latest 13F portfolio had $39 Billion in stocks and options. Usually it’s not practical to imitate quantitative hedge funds like D.E. Shaw or Jim Simons’ Renaissance because they hold most of their holdings for less than a few weeks. By the time they report their holdings, they probably don’t even have them in their portfolios. However, in some cases they make longer term investments and these can be replicated by small investors who can’t invest in these funds because they aren’t wealthy enough.
We analyzed D.E. Shaw’s SEC filings and compiled the list of their longer term investments. D.E. Shaw had at least $90 Million invested in each of these stocks at the end of September and $113 Million invested at the end of December. Clearly these are very large positions that aren’t initiated to profit from a short-term arbitrage opportunity. We also verified that the fund had the top five stocks in its portfolio at the end June. Here is how D.E. Shaw’s long-term stock picks performed since the end of December: