Ex-Harvard chief joins hedge fund company

A few months after stepping down as president of Harvard University, Lawrence H. Summers has joined a $25 billion hedge fund management firm, D.E. Shaw & Co., as a part-time managing director.

Summers will remain on the Harvard faculty while he works for D.E. Shaw on strategic initiatives and high-level portfolio management, according to the company.

His ``extraordinary intellect, deep understanding of the financial markets, and wealth of organizational experience will be uniquely valuable resources to the firm," the New York-based company's chairman, David Shaw, said in a statement.

A spokeswoman for D.E. Shaw declined to comment on Summers's role in the company or his pay.

While the move makes some Harvard professors wonder whether Summers might eventually leave the university for the world of finance, friends said that is unlikely.

``He's so devoted to his teaching, I would be very surprised if he did anything more than dabble" in the financial markets, said economics professor Edward Glaeser, who added that Summers spent 15 minutes last week brainstorming with him about an undergraduate's thesis.

Summers, who is in Cambridge on a sabbatical this school year, has also agreed to write a monthly column in the Financial Times of London and to contribute to a blog started by the New Republic, called Open University. His column in the Financial Times was due to start this fall.

The 51-year-old economist declined to comment yesterday beyond his statement in D.E. Shaw's press release, in which he expressed excitement about working with D.E. Shaw.

Summers announced in February that he would resign as president, after coming under repeated assault from faculty and losing support on the university's governing board. Critics accused him of mismanagement and decried statements he made, including a suggestion that women lacked the same ``intrinsic aptitude" for science as men. His supporters believed he was punished for trying to shake up a complacent faculty.

As his resignation was announced, Summers was named a university professor at Harvard, the highest faculty rank. He is based at the Kennedy School of Government. He and his wife, Harvard English professor Elisa New, recently bought a house in Brookline.

Before becoming president of Harvard in 2001, Summers was chief economist at the World Bank and later secretary of the treasury. In 1993, he won the prestigious John Bates Clark Award for economists under the age of 40.

D.E. Shaw has about 1,000 employees around the country and in London and Hyderabad, India. It does not have an office in Boston. Summers is expected to sometimes commute to New York and sometimes work from Massachusetts.

The company is known as a particularly brainy investment firm. Shaw, its founder, is a former Stanford computer scientist, and Fortune magazine once called the company ``a nest of mathematicians, computer scientists, and other devotees of quantitative analysis who use their arcane sciences to monitor the world's financial markets and squeeze profits out of places most people would never think of looking."

A hedge fund is an investment partnership for wealthy individuals that often makes riskier investments than other funds. D.E. Shaw makes other types of investments, as well.

That type of intellectual challenge is appealing to Summers, Glaeser said. Because it involves identifying securities that are underpriced or overpriced in the market, it performs a useful role in society, he added.

``He's using his intelligence to do some social good, as well as some private good," Glaeser said, adding that he didn't think that Summers would ever put money first in his career.

University rules allow professors to engage in outside activities as long as their responsibilities are limited and do not represent a conflict of interest. Some professors have private law practices, consulting businesses, or paid positions on corporate boards.

Bombardieri can be reached at bombardieri@globe.com.