13 Oct

D. E. Shaw & Company: Top Holdings and Fears

WRITTEN BY Rabindra Samanta

David Elliot Shaw or D.E. Shaw is a prominent billionaire hedge fund manager and founder of the firm D. E. Shaw & Company. The firm was once recognized as ‘the most intriguing and mysterious force on Wall Street’ by Fortune magazine. Additionally, the hedge fund manager is well-known in the hedge fund industry because of his various investment idea. 

D. E. Shaw & Company: Top Holdings and Fears

Delisting fears

Alibaba Group Holdings Ltd ADR (BABA) was the largest holding of D. E. Shaw & Company in the second quarter of 2019. This stock makes up 1.3% of holdings in the company’s portfolio. However, the Trump administration is considering various measures to limit US investment in China. One of the possible measures could be the possible delisting of major Chinese companies from the US stock exchanges. However, it could hurt major Chinese giants.

Stocks like Alibaba Group Holdings Ltd, Baidu (BIDU), and JD.com (JD) slipped 5.1%, 4.2%, and 5.9%, respectively, on September 27 after the media reports. If Alibaba falls further, then it may affect the portfolios, where it remained one of the most important holdings.

Besides, the second-largest holding for D. E. Shaw & Company was Amazon (AMZN). AMZN stocks have 1.1% weight in the firm’s portfolio. In addition, Johnson & Johnson (JNJ), Microsoft (MSFT), and ConocoPhillips (COP) make up 1.05%, 1.01%, and 0.98%, respectively, of the firm’s portfolio. These are the next biggest holdings of the firm.

D. E. Shaw: top holdings

At least 60% constituents of D. E. Shaw & Company are sensitive to the business cycle. By contrast, Nelson Peltz’s Trian Fund Management is overloaded with defensive stocks. And, cyclical could underperform defensive during a slowdown. Unfortunately, the global real GDP growth rate could contract by 30 basis points in 2019. In addition, the uncertainty around global trade and other fundamental factors could be behind the slowdown.

The top buys of the firm in the second quarter of 2019 were Alibaba, NVIDIA Corporation (NVDA), Amazon, and Anadarko Petroleum (APC). Also, the D. E. Shaw & Company increased its holdings in these stocks by 0.76%, 0.71%, 0.54%, and 0.54%, respectively, in the same quarter. 

Also, the firm has the highest investment in the information technology sector in the second quarter of 2019. This sector represents around 18.3% of D. E. Shaw & Company’s portfolio. Consumer discretionary and the health care sector represent 16.2% and 15.4% holdings in the firm’s portfolio, respectively. Plus, these two sectors are the next biggest holdings of the D. E. Shaw & Company.

ETFs performance

Moreover, the Technology Select Sector SPDR ETF (XLK) tracks the performance of the US technology sector. Also, XLK returned 31.4% on a year-to-date basis. In addition, the broader market S&P 500 Index returned 16.4% during the same period.

The Consumer Discretionary Select Sector SPDR ETF (XLY) and the Health Care Select Sector SPDR ETF (XLV) have risen 17% and 4.2%, respectively. XLY tracks the performance of the consumer discretionary sector. Also, XLV has the US health care sector stocks.

Latest articles

Goldman Sachs (GS) settled a lawsuit that alleged it rigged bond prices. Also, Deutsche Bank agreed to pay a fine of $15 million to settle a lawsuit.

In the November 15 premarket trading session, Amarin Corporation (AMRN) stock rose more than 7%, caused by the FDA positive decision for Vascepa.

In the November 14 trading session, Aurora Cannabis (ACB) stock fell 12.7% from the previous session during after-hours trading.

Strategy Analytics reported that Apple could lead the 5G smartphone market in 2020, outshining Samsung—the current leader in the global 5G market.

This week has been tough for the cannabis sector. Cronos Group and Canopy Growth reported lower-than-expected earnings, and the sector ETFs dropped.

Yesterday, Argus Research upgraded Uber stock from “hold” to “buy.” Let's look at Uber and Lyft’s recent analyst rating changes.