D.E. Shaw’s top shareholder activist Koffey leaves hedge fund

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(Reuters) – Hedge fund manager Quentin Koffey, who joined D.E. Shaw & Co two years ago from Elliott Management Corp to lead its shareholder activism strategy, has left to join Senator Investment Group LP, the firms told Reuters on Thursday.

The move is a setback for D.E. Shaw, which is seeking to emulate Elliott as a generalist hedge fund with strong activist leanings, advocating for major changes at companies, such as putting themselves up for sale.

Some funds are using activism to distinguish themselves with strategies that cannot be replaced by cheaper index funds, as investors spurn hedge funds with high fees and lackluster returns, pulling out billions from the $3 trillion industry.

Koffey left D.E. Shaw this week and no replacement has been announced internally, people familiar with the matter said. He will start work in July at Senator, an 11-year-old hedge fund which specializes in so-called event-driven investing such as mergers, one of the sources added.

“We do not expect any material changes to our activist positions due to Quentin’s departure,” D.E. Shaw spokesman Randall Whitestone said by email. “Activism is an important tool that we will continue to use when necessary to create shareholder value.”

“As the pace of change in business accelerates, there is a compelling opportunity for us to work collaboratively with management teams to help them strengthen their businesses and create value for shareholders,” Senator founders Alexander Klabin and Douglas Silverman said in an emailed statement.

Koffey could not be reached for comment.

D.E. Shaw, known for its computer-driven trading, became a bigger presence in shareholder activism under Koffey. With bets on home improvement retailer Lowe’s Companies and grain trader Bunge Ltd, Koffey convinced these companies to shake up their boards.

Senator is less than one-fifth the size of D.E. Shaw, with about $7.7 billion in assets. Senator has been looking to hire someone for over a year to boost its shareholder activism, according to the sources.

At Senator, Koffey will work with a research team, staffed by former McKinsey consultants, who are seeking to invest major stakes in companies with managements it can work with to make improvements, one of the sources said.

Koffey spent seven years working at Paul Singer’s Elliott, widely viewed as one of Wall Streets most successful activist investors, before moving to D.E. Shaw in 2017.

Reporting by Svea Herbst-Bayliss in Boston; Editing by Richard Chang

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