Where some hedge funds see a problem, D.E. Shaw & Co. see an opportunity.
The New York-based hedge fund has set up a distressed asset team focused on buying the troubled assets that are an albatross around many a hedge fund’s neck. The $28 billion firm is seeking out fellow funds that wish to divest themselves of the side-pocketed assets that caused so much trouble during the financial crisis.
The D.E. Shaw Portfolio Acquisitions Unit was created last year to find those that could make a buck for D.E. Shaw’s portfolios, according to the Financial Times. The new division will not manage a fund itself, but will instead seek out opportunities for the firm’s existing offerings.
Many hedge funds moved the troubled and illiquid assets that sent returns tumbling in 2008 into side pockets to prevent them from affecting their more liquid, better-performing assets. Side-pocketed assets are generally off-limits to investors for an indefinite period.