From Yahoo Finance: 2025-05-10 10:21:00

Billionaire David E. Shaw’s hedge fund, D.E. Shaw & Co., has a 13F portfolio worth $136.27 billion, with flagship funds achieving annualized returns of 12.7% and 13.7% since inception. The fund uses complex algorithms and human-run investing strategies, returning significant gains to shareholders over the years.

In 2024, Shaw’s hedge fund saw impressive gains, with the Composite fund up 18% and Oculus soaring 36%. The fund plans to return billions to external clients following the strong performance. However, the overall stock market is turning bearish amid recession concerns and a US trade war.

The US Federal Reserve kept interest rates unchanged, causing uncertainty in the equity market due to President Trump’s trade policy impact. The Fed noted increased economic outlook uncertainty and risks to unemployment and inflation. Tariffs could worsen inflation, leading to a stagflation scenario.

Amid economic uncertainty, focus is shifting to small-cap stocks with significant upside potential, as large-cap stocks face pressure from high valuations. D.E. Shaw’s portfolio includes solid small-cap stocks poised for long-term value generation. The hedge fund’s top stock picks have outperformed the market significantly.

Victoria’s Secret & Co. (VSCO) is among David E. Shaw’s small-cap stock picks with a $83.85 million equity stake and a $1.58 billion market capitalization. The company is modernizing its brands through inclusive design and digital strategies, targeting long-term growth with a customer-focused approach.

For Q4 2024, Victoria’s Secret & Co. saw net sales rise 1% to $2.106 billion, with net income at $193 million. The company holds a Hold rating from 11 analysts, with a $25.32 average price target, suggesting a 31.60% upside potential from its current $19.24 price. VSCO ranks 9th on Shaw’s list of small-cap stock picks.

While VSCO shows investment potential, AI stocks are believed to offer higher returns within a shorter timeframe. An AI stock has seen gains in 2025 while popular AI stocks have dropped. For a promising AI stock trading at less than 5 times its earnings, check out Insider Monkey’s report on the cheapest AI stock.



Read more at Yahoo Finance: Among Billionaire David E. Shaw’s Small-Cap Stock Picks with Huge Upside Potential