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This is the Third Quarter 2008 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F filings here.

The other funds we've already covered include:

Next up is D.E. Shaw & Co. D.E. was founded in 1988 by David E. Shaw and as of December 1, 2008, managed around $33 billion. It focuses on intertwining technology and finance and is a hedge fund, private equity firm, and technology development shop all in one. It mainly employs quantitative strategies and does a lot of statistical arbitrage. Shaw oversees strategic maneuvers at the firm, but is no longer active in the day-to-day operations. He received his Ph.D. from Stanford University. Some notable former employees include Jeff Bezos (before founding Amazon.com) and Lawrence Summers, who recently left the firm to serve on President Elect Obama’s economic team.

In our November hedge fund performance numbers update, we noted that Shaw's Oculus fund was up around 10% for 2008 as of November, as they had profited from their global macro strategy. Its Composite fund, on the other hand, was -4% for 2008 at the time, having pursued multiple strategies. You can view a video about the firm's work culture here. In Alpha's latest hedge fund rankings, D.E. Shaw is ranked sixth in the world.

Taken from its website:

They invest in a wide range of companies and financial instruments within both the major industrialized nations and a number of emerging markets. Its activities range from the deployment of investment strategies based on either mathematical models or human expertise to the acquisition of existing companies and the financing or development of new ones.

The following were its long equity, note, and options holdings as of September 30, 2008 as filed with the SEC. All holdings are common stock unless otherwise denoted.

Some New Positions (Brand new positions that it initiated in the last quarter):

  • Ace (NYSE:ACE)
  • Laboratory Corp (NYSE:LH)
  • Vale (NYSE:RIO)
  • Procter & Gamble (NYSE:PG) Puts
  • Metlife (MEU)
  • National City (NCC)
  • IAC Interactive (NASDAQ:IACI)
  • US Bancorp (NYSE:USB) Calls
  • Lehman Brothers 7.25% Preferred (OTC:LEHMQ)
  • Blackrock (NYSE:BLK)
  • Parker Hannifin (NYSE:PH)
  • Maxtor (inactive) Note
  • Myriad Genetics (NASDAQ:MYGN) Calls
  • ITT Educational (NYSE:ESI)
  • Eastman Kodak (EK)
  • Canadian National Railway (NYSE:CNI)
  • Prologis (NYSE:PLD) Note
  • Wrigley (WWY)
  • Tyson Foods (NYSE:TSN)
  • Coca Cola (NYSE:KO) Puts
  • Activision Blizzard (NASDAQ:ATVI)
  • Prologis (PLD-PG) 2nd set of Notes
  • Aetna (NYSE:AET)
  • Valeant Pharma (NYSE:VRX)
  • Brookfield Asset Management (NYSE:BAM)
  • Ticketmaster (TKTM)
  • Verisign (NASDAQ:VRSN)
  • Amgen (NASDAQ:AMGN) Puts
  • Fifth Third Bancorp (NASDAQ:FITB)

Some Increased Positions (A few positions it already owned but added shares to):

  • Freeport McMoran (NYSE:FCX): Increased position by5,102%
  • Anadarko Petroleum (NYSE:APC): Increased position by 100%
  • Baker Hughes (NYSE:BHI): Increased position by 74%
  • Target (NYSE:TGT): Increased position by 66.5%
  • Goldman Sachs (NYSE:GS) Calls: Increased position by 47%
  • Warner Chilcott (NASDAQ:WCRX): Increased position by 44%
  • Travelers Companies (NYSE:TRV): Increased position by 40.5%
  • HCP (NYSE:HCP): Increased position by 42%
  • Allstate (NYSE:ALL): Increased position by 38%
  • News Corp (NWS.A): Increased position by 29.5%
  • Anheuser Busch (BUD): Increased position by 27%
  • Google (NASDAQ:GOOG) Calls: Increased position by 24%
  • Vertex Pharma (NASDAQ:VRTX): Increased position by 22.5%
  • Burlington Northern (BNI): Increased position by 22.5%

Some Reduced Positions (Some positions it sold some shares of - note not all sales listed):

  • United Parcel Service (NYSE:UPS): Reduced position by 38.5%
  • Hudson City Bancorp (NASDAQ:HCBK): Reduced position by 33%
  • Exxon Mobil (NYSE:XOM): Reduced position by 30%
  • Pfizer (NYSE:PFE): Reduced position by 25%
  • XTO Energy (XTO): Reduced position by 22%

Removed Positions (Positions it sold out of completely):

  • Clear Channel (CCU-OLD)
  • Navteq – inactive
  • App Pharma - inactive
  • IAC Interactive (IACI)
  • Thermo Fisher Scientific (NYSE:TMO)
  • Cliffs Resources (NYSE:CLF) Calls
  • XM Satellite (XMSR)
  • Electronic Data System (EDS-PI)
  • Wendys (NASDAQ:WEN)
  • Ventas (NYSE:VTR)
  • American International Group (AIG-PA) Preferred
  • Kohls (NYSE:KSS)
  • Public Storage (NYSE:PSA)
  • Ingersoll Rand (NYSE:IR)
  • Getty Images - inactive
  • Cleveland Cliffs (CLF) Puts
  • Archer Daniels Midland (ADM-PA) Preferred
  • Partnerre (NYSE:PRE) Calls
  • Invesco (NYSE:IVZ)
  • Elan (NYSE:ELN)
  • Imclone (IMCL)
  • Williams Companies (NYSE:WMB)
  • Proassurance (NYSE:PRA)
  • Vivo Participacoes (NYSE:VIV)
  • Blackrock (BLK)
  • Chevron (NYSE:CVX) Puts
  • Rambus (NASDAQ:RMBS)
  • Encana (NYSE:ECA)
  • Ross Stores (NASDAQ:ROST)

Top 20 Holdings (by % of portfolio):

1. Equity Residential (NYSE:EQR): 0.98% of portfolio
2. Pfizer (PFE): 0.9% of portfolio
3. Goldman Sachs (GS) Calls: 0.88% of portfolio
4. HCP (HCP): 0.83% of portfolio
5. Union Pacific (NYSE:UNP): 0.82% of portfolio
6. Vertex Pharma (VRTX): 0.81% of portfolio
7. Avalonbay Communities (NYSE:AVB): 0.7% of portfolio
8. Exxon Mobil (XOM): 0.69% of portfolio
9. Owens Corning (NYSE:OC): 0.69% of portfolio
10. Google (GOOG) Calls: 0.67% of portfolio
11. Warner Chilcott (WCRX): 0.67% of portfolio
12. Mylan (NASDAQ:MYL): 0.62% of portfolio
13. United Parcel Service (UPS): 0.61% of portfolio
14. Huntsman (NYSE:HUN): 0.6% of portfolio
15. Burlington Northern (BNI): 0.6% of portfolio
16. Anadarko Petroleum (APC): 0.59% of portfolio
17. Endo Pharma (NASDAQ:ENDP): 0.58% of portfolio
18. Baker Hughes (BHI): 0.57% of portfolio
19. Hudson City (HCBK): 0.56% of portfolio
20. Mastercard (NYSE:MA) Calls: 0.56% of portfolio

Assets from the collective long U.S. equity, options, and note holdings were $56.4 billion last quarter and were $45.3 billion this quarter. We have not detailed the changes to every single position in this update, but we have covered all the major moves.

Also, keep in mind that these filings only include long equity, notes, and options holdings. They do not reflect its cash, short portions, or holdings in other markets (currency, commodities, debt, foreign markets, private equity, etc.).

Overall, it's been one of the worst years ever for hedge funds, as we noted in our November hedge fund performance number update. Thus, the recent moves they've made in their portfolios become all the more interesting given the way the market has played out.

Source: Hedge Fund Portfolio Tracking: D.E. Shaw & Co (David E. Shaw), Q3 2008