D.E. Shaw VS Two Sigma for a Quant
Hello everyone,
I was fortunate enough to land a quant internship in many good hedge funds and prop shops. I need your help and feedback to decide which one to go for.
I'm currently mainly hesitating between D.E. Shaw and Two Sigma (although I'm also considering Tower Research).
My ideal scenario is to get a return offer after this internship and join the firm.
What I'm optimizing for is best (future) full time job. Here's what I care about (in decreasing order):
1- Compensation and career growth: compensation is the main factor but I also care about being able to grow professionally and have more responsibilities on day. Ideally I want a place where there are still great opportunities for a new graduate.
2- "Academic Freedom": I like places where people take their time in their research and are free to investigate what they think is relevant (to some extent), where people are treated like adults.
3- Flexibility: This intersects my previous point (treated like adults). I like places that (only) cares if you get the job done but doesn't necessarily care about "how you achieve it". I value independence and I don't like being micromanaged.
4- Job Security: This is also important, I wouldn't want to be in a place that uses people for 4-5 years and then lays them off.
If I care about these criteria (in that order) which company do you think would be a better fit for me? I would be particularly interested to hear from people who currently (or used to) work at these companies. Of course people that know (through friends) can also be very helpful. I would also be very interested to hear about what you think is the major cultural differences between these two companies.
Both are great. Congrats!
Your criteria scoring will be highly dependent on which team you place on. Same with Tower.
If you want security and just cruise for a couple of years I'd go with DES.
I understand that there might be some variability within the same company, but don't you think that there is a typical case? ("overall culture")
Nope. this will be highly dependent on your boss and the specific team. Each has their specific culture. Also, I'd say depending on what you are used to wrt 2/ I'd seriously not overweight this. All places will advertise they give academic freedom, but only in the sense that it has to generate revenue. Don't be misguided in thinking you can pursue pie in the sky ideas for a year. Generally you'll be given a couple of months to study, prototype, and test an idea.
I have not worked at either so take this with a grain of salt, but one of my closest friends (think best man at wedding / godfather to my future children) has worked at both DE Shaw and Two Sigma and he says it's a no-brainer to go with Two Sigma. He couldn't get into specifics, but the argument was essentially DE Shaw had gotten "too big for it's own good," and that performance has not scaled with its increase in AUM. He also mentioned that DE Shaw has pursued strategies in assets and markets way beyond its core competency, and while he wouldn't go as far as to call it a "spray and pray" approach, it was certainly less and less based on rigorous analysis / research. Indeed, if you look at DE Shaw today, it seems 40% of its AUM is dedicated to discretionary strategies instead of systematic. One final thing he mentioned was the pervasive culture of "arrogance" at DE Shaw, whereas Two Sigma had less egos and was more of a collegial atmosphere. Again, this is just n = 1, so take it with a grain of salt.
Thank you for your response!
Is Two Sigma's performance consistently better than D.E. Shaw's? Is compensation and career growth better at Two Sigma? What I like about D.E. is this academic feel to it (my second criteria), do you know if it's the same at Two Sigma?
How old is this advice from your friend? 2sig had a terrible year, DE Shaw has been bumbling along. But as one of the posters below pointed out their core quant strats have very solid performance.
What teams are good to join in both companies? Additionally, which companies are doing very good these days?
For a new grad, which hedge funds/ prop shops do you think are the best to join currently? (HRT? JaneStreet? Citadel? PDT?)
(I asked the same question a bit below too)
Don't know how DE Shaw works, but doesn't Two Sigma do a lot of obfuscation (like you can't even see the PL of your own work)? That would be a big negative in my book
It’s like that at many places. I think both DE Shaw and 2 Sigma will be similar in that regard (silos, not really your own PnL, hidden behind security and not knowing ultimate decisions).
I have friends at both (or who have worked at both), so small sample size, but based on their comments I would recommend 2 Sigma. There is a bit of ego at both but have noticed it more at DE Shaw, the silo’d atmosphere is definitely a real thing, and from my conversations both are a place that values academics/research/ideas and much less connection to the market.
To answer the other question, yes 2 Sigma does have an academic feel, although a bit more computer science tilted than DE Shaw.
That's a big negative for me too! is that true?
Yep, DES is more open than 2sig in this regard. All the alphas are hidden and are only accessible to upper mgmt and senior risk managers.
Thank you, that's good to know!
I know people at both. D.E. Shaw and Two Sigma both have strong track records in their flagship funds. I believe Two Sigma had a bad year in 2019, while D.E. Shaw had a better one, but both have done very well for many years, with no sustained deterioration over time. Both companies offer good jobs for quants, with relatively high pay and career stability. The people I know at the companies are all pretty happy with their jobs.
Two Sigma's hedge funds are more quant-oriented. There are few-to-no fundamental strategies, outside of VC. However, the company has diversified its overall focus to include significant investments in fields outside of public markets, such as the VC division I mentioned, marketing analytics offerings, some robotics work, and more.
D.E. Shaw has a far broader portfolio of investment strategies, with less of a pure quant focus. For instance, in addition to their quant strategies they have a large discretionary macro division, long/short equities, etc. But they seem somewhat less focused on expanding the company beyond investment management.
Both companies also have large quant asset management divisions, with a focus on low-fee, low-alpha, highly scalable strategies. Much (most?) of the expansion of AUMs at both firms in recent years come from their growing asset management businesses.
Thank you for you answer, can you comment on my criteria 1,2,3 and 4 regarding these two companies, you seem to know a lot.
With respect to your 4 criteria, what I've heard is pretty good about both firms, though I don't know that much. Compensation at both firms is quite solid, though I think not the highest in the industry (in particular, I believe certain HFT-oriented firms pay a fair bit more if you perform, and have a bit more of an "eat what you kill" culture, though I'm really comparing apples and oranges here). I don't know about the academic freedom, but I have heard the outlines of interesting and innovative strategies being worked out at both places. I know nothing about day to day management and I imagine your specific boss and team would matter the most. All I can say is, my friends clearly like their jobs. Neither firm is known for a churn-and-burn culture. I don't think firings are especially common.
Very accurate on aum expansion into funds management, 2sig has invested in market making, VC, insurance, data science saas, while DES has mainly focused on quant, L/S, macro. Frankly, the only 'special' teams here are the quant teams. Everything else has had middling performance.
Disagree on no deterioration. 2sig used to have a 2.5+ sharpe in their core quant funds from pre-2015. This has markedly deteriorated. Also they've been trying very hard to diversify alpha by building out event driven trading, options, etc whether this improves their performance is yet to be seen. DES has also seen quite marked deterioration. They've lost several key personnel to the MMs taking key IP and alpha, especially on key desks that have outperformed.
What places do you think are very good to join currently (for a new graduate)?
The issue with these big SM funds is that the original and really successful groups in them are either not hiring at all or are siloed (employees are denied access to code/information). Most of the growth and hiring is in their newer businesses, and that is where new hires are likely to go.
I see, that makes sense. What places do you think present an excellent opportunity for new grads currently?
The issue with MM funds is that original and really successful groups in them are either not hiring at all. The hiring teams are either new or not profitable. Most of the growth and hiring is in their newer businesses, and that is where new hires are likely to go. Many teams in a MM platform can't last more than 3 years.
The issue with MM funds is that original and really successful groups in them are either not hiring at all. The hiring teams are either new or not profitable. Most of the growth and hiring is in their newer businesses, and that is where new hires are likely to go.
From what I have heard, Tower is by far the most eat what you kill of those mentioned. I would go there for the smallest teams / highest beta to your own performance. If you're on a good team you'll get paid, if not then not so much. (Just what I've heard)
I haven't worked at either, but based on what you've said, I would go with Two Sigma. From what I know from people who have worked at both, Two Sigma seems to strive for a "tech company" type of culture, while DE Shaw is more of your traditional HF culture with a quant focus. You'll likely get paid better at DE Shaw though in the long term if you have the magic touch.
I interned at 2Sigma, and all of them recruit at my school so I've had friends who interned/work there now.
2Sigma is definitely feels like a tech firm rather than a traditional finance firm like DE Shaw. I'd say Tower is in between but more similar to DE Shaw. Honestly, I'd choose 2Sigma if I were you although I chose not to return. I think you would enjoy life a bit more if you were at 2Sigma. I know a few people who interned at Tower choose 2Sigma for full time fwiw. Honestly, if you ever want to exit quant finance, and go to any tech firm you want 2Sigma is probably the place to be.
I'm not in the industry but happen to know people who previously worked at both. The general consensus was that twosig was a better place for employees (benefits-wise) and that it was portrayed by management as a tech company rather than a HF. I know the comp at twosig was weighted towards base while DE seemed to have a better all-in number but it is worth mentioning that my buddy there specifically mentioned that DE does scoop up talent and can, at times, not put the talent to work and "bench" them until a fit or whatever is found within the groups/pods. Take this with a grain of salt obviously given my sources are from people who left in the last 18 months but happy to elaborate where helpful.
"bench" lol i've never heard it described like that.
Generally, recruitment at 2sig is via a grueling 2 day interview. A lot of white boarding and coding. You will develop more rounded skills and better transition to tech but seriously siloed. If a team really likes you they will hire you after the interview. Not sure what you mean by not using talent; are you sure this was in their core quant groups?
They also have support roles in data science, core engineering, and other businesses they're branching into.
Eius iusto ut rerum sit. Qui dolore delectus fugiat dolor nam.
Odio odit non qui quisquam repellat cum reiciendis. Eius impedit possimus non. Et quis ratione voluptas.
A quis omnis eum recusandae dolor. Non omnis nihil temporibus.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Autem debitis saepe et expedita aut. Labore voluptatem quia repudiandae et perspiciatis in adipisci. Animi id voluptatem nulla enim rerum quasi. Dolor sit itaque non est beatae quidem accusamus sint. Ab cupiditate recusandae libero rem quia. Laborum qui quod neque nihil.
Sint fuga quod dolor temporibus suscipit dolorem minima. Nihil et enim beatae optio fuga sequi. Qui aperiam ipsum ducimus aperiam.
Quaerat illum quos cupiditate sed rerum officia debitis. Qui et enim et incidunt aperiam. Dolor neque iste debitis adipisci corporis eum facere.
Doloremque iusto laborum voluptas voluptatem suscipit accusantium. Vel autem et autem iusto eligendi sint labore. Ullam officiis consequatur aut labore. Qui labore rerum provident molestias hic qui. Sit temporibus quibusdam dolorum laboriosam ut aut aut in.