Employee Profiles

Next profile: Susan Eilenberg

Seth Charnow, Credit Opportunities Group

What is your role at the D. E. Shaw group?

I am a credit analyst in the firm's Credit Opportunities ("CROP") group. Generally, my role is to perform research on the debt and equity securities of public and private companies that are in bankruptcy, are likely to become bankrupt, or are about to emerge from Chapter 11. I also conduct research on solvent companies that we think are inappropriately valued for any of a number of reasons. After conducting research on these companies, my role is to make buy and sell recommendations to our portfolio managers and to become personally involved in the investment situation, as needed.

How do you become personally involved in investment situations?

I spend many of my days on the phone speaking to industry contacts or visiting company facilities to learn about specific businesses. I am interested in getting as much information about a given business as possible, so visiting company facilities and speaking to current and former employees, customers, and suppliers is often very enlightening. In distressed and turnaround situations, this type of primary research is critical for differentiating between broken balance sheets (which are usually fixable) and broken businesses (which are often unfixable).

I spend other days involved in the bankruptcy process. Chapter 11 of the bankruptcy code is complex, with a lot of disparate stakeholders, including managers, employees, lenders, vendors, equity holders, and other creditors. I spend a lot of my time working and negotiating with lawyers, bankers, and other participants in the Chapter 11 process to make sure that the D. E. Shaw group's interests are being protected. This typically involves making sure that court procedures, financing arrangements, plans of reorganization, and other parts of the Chapter 11 process are consistent with our objectives.

Why did you decide to work at the D. E. Shaw group?

I first worked here as a summer intern during business school and then joined the firm on a full-time basis after I graduated. There are several things that attracted me to the firm. First, the firm and its employees have an outstanding reputation, both in terms of investment skill and the way they conduct business. The firm has been successful in a wide range of investment strategies, but will not cut corners or take unnecessary risks to be successful. Second, the people here are incredibly sharp and have a different approach to investing than I had experienced before. Specifically, the focus here—even in fundamentally driven investment strategies like distressed investing—is on rigorous risk-adjusted investing, which means that it's okay to risk losing money on a given investment as long as the probability-weighted upside outweighs the associated downside. In addition, given its size and reputation, the firm sees a number of unique investment opportunities and takes leadership roles in many really interesting investment situations. Finally, and most importantly to me, I just plain enjoy the people here.

What is your favorite part of the job?

The best part of my job is the remarkable amount of responsibility I enjoy; my opinion really matters. Whether it's deciding how attractive a particular business is or how strong a legal argument we have in the Chapter 11 process might be, at the end of the day my job is to develop well reasoned opinions and to communicate them clearly to our traders and portfolio managers. In my current role, this happens in a way that gives me a lot of ownership over my recommendations and very direct involvement in the decisions we make as a group.

Of course, this responsibility adds pressure to my job, but the opportunity to make important decisions is exciting and rewarding and has helped me refine my business judgment. The D. E. Shaw group is also genuinely open to new ideas. Employees enjoy a good deal of room to run with new ideas, whether for trades or entirely new businesses. We're encouraged to "think big."