Equity Research interview preparation

Questions

100

Traced to a firm

72

Firms

45

Updated

September 2026

Asked at

All firmsMorningstar12Man Group6Balyasny Asset Management5BLBlackRock5FTFranklin Templeton5MSCI5Jefferies4CSCredit Suisse3Fidelity Investments3Moody's3Perella Weinberg Partners3Point723S&P Global3The Vanguard Group3WMWellington Management3Advent International2Apollo Global Management2Bank of America2Carlyle Group2DED.E. Shaw2Houlihan Lokey2HSBC2Piper Sandler2Sequoia Capital2SSState Street2Viking Global Investors2WBWilliam Blair2ACAQR Capital Management1BGBaupost Group1BMBNY Mellon1Centerview Partners1Coatue Management1Goldman Sachs1GSGuggenheim Securities1HWHarris Williams1Insight Partners1Invesco1Mizuho1Moelis & Company1MSMorgan Stanley1PIMCO1SCSchroders1Scotiabank1T. Rowe Price1TSTruist Securities1

Topic

All topicsResearch process9Stock pitch6Company analysis8Investment philosophy5Valuation14Modelling2Portfolio and risk8Macro8Sector knowledge2Accounting8Career and fit12Industry knowledge6Quantitative research1Sector: technology3Sector: consumer1Sector: healthcare1Sector: energy1Sector: financials2Sector: industrials1Case and estimation2

Level

AnyCoreIntermediateHard

Type

AnyTechnicalCaseFitBrainteaserMarket view

1. 011How would you hedge a name that does not have a close public comparable?Portfolio and riskHardsuperdayBalyasny Asset ManagementEquity Research · New York · 2026

   Say this

   Hedge the exposures rather than the company. Decompose the position into its factor risks, market beta, sector, style, currency, commodity input, then hedge each with whatever liquid instrument matches it.

   Then walk it

   1. Start by decomposing: run the stock against factor returns and see what it is actually exposed to. Often a 'unique' business is really a bundle of common exposures.
   2. Hedge the market beta with an index future, sized on the regression beta rather than one.
   3. Hedge sector exposure with the closest sector ETF, accepting that the fit is imperfect. An imperfect hedge that removes 60 percent of the variance is better than no hedge.
   4. Hedge the specific input if there is one: a fuel-exposed business can be partly hedged with the commodity, a foreign earner with FX forwards.
   5. Then accept and size for the residual. The leftover idiosyncratic risk is the part you are actually being paid for, so the honest answer is that you hedge what you do not have a view on and hold what you do.
   6. And the practical constraint on a multi-manager platform: the risk system will impose factor limits anyway, so the hedge is often not optional. Saying that shows you understand how these seats actually operate.

   Where candidates lose it

   Reaching for a single 'closest competitor' short. If there were a close comp the question would not have been asked. The expected answer is factor decomposition, and naming the residual idiosyncratic risk as the intended exposure.

   Expect next

   • What residual risk are you left with?
   • How would you size the position?
   • What factor limits would you expect to operate under?

   Reported by candidates at Balyasny Asset Management (Equity Research, New York, 2026). Source: Wall Street Oasis.

2. 031How do you decide when to sell?Portfolio and riskHardsuperdayAsset managementHedge funds

   Say this

   Three reasons and only three: the thesis played out and the price reflects it, the thesis is broken, or something better came along. Never sell because the price fell, and never hold because you are down.

   Then walk it

   1. Thesis achieved: the variant view became consensus and the upside to your revised target is no longer compelling. This is the happy case and people systematically sell too early here.
   2. Thesis broken: the specific thing you said would happen did not, or a fact you relied on turned out false. This should trigger a sale regardless of price, and it is where writing down the falsifier in advance pays for itself.
   3. Better use of capital: opportunity cost. In a concentrated portfolio every new idea must displace something, which imposes useful discipline.
   4. What is not a reason: the price fell, so it is cheaper now. That is only a reason to buy more if the thesis is intact, and only if you have checked rather than assumed.
   5. The behavioural safeguards: a written thesis with falsifiers, a scheduled review after every result, and a rule that you re-underwrite a position from scratch rather than defending your existing note.
   6. And separate trimming from selling. Reducing on valuation while the thesis compounds is a different decision from exiting, and conflating them is how people sell their best ideas.

   Where candidates lose it

   Giving a price-based rule like a fixed stop loss as the whole answer. For fundamental investing, the sell decision is thesis-based. Stops are a risk management overlay, not a research judgement, and saying only that reveals a trader's frame in a research seat.

   Expect next

   • How do you avoid selling winners too early?
   • Do you use stop losses?
   • How do you re-underwrite a position?
3. 032How do you size a position?Portfolio and riskHardsuperdayHedge fundsAsset management

   Say this

   By conviction and by downside, not by expected upside. The question is how much you lose if you are wrong, multiplied by how likely that is, against the portfolio's tolerance for that loss.

   Then walk it

   1. Start from the downside. If the bear case is minus 40 percent and you would be uncomfortable losing more than 2 percent of the fund on one name, the position is capped at about 5 percent.
   2. Then conviction, which really means how confident you are in the analysis and how falsifiable it is. A thesis with a clear near-term test supports a larger position than one that depends on a five-year structural view.
   3. Then correlation. Three positions expressing the same macro view are one position. Sizing has to be done at the portfolio level or you accumulate hidden concentration.
   4. Then liquidity: how many days of average volume is the position, and can you exit it in a stressed market? Illiquidity is a real constraint on size regardless of conviction.
   5. The Kelly criterion is the theoretical frame, but full Kelly is far too aggressive in practice because you cannot estimate probabilities that precisely. Most investors run a fraction of it, and saying that shows you know the theory and its limits.
   6. In a multi-manager seat, most of this is imposed by the risk system anyway, and the analyst's job is to argue for the sizing within those limits.

   Where candidates lose it

   Sizing by upside. Everyone's best idea has the most upside, and sizing on that alone is how funds blow up. Downside and correlation are the content of a real answer.

   Expect next

   • What is your maximum position size?
   • How do you handle correlated positions?
   • Would you add to a loser?
4. 065How would you allocate a $100 million mandate across a portfolio of funds?Portfolio and riskHardsuperdayMSCIRisk Management · Remote · 2013The Vanguard GroupInvestment Research · Malvern · 2024

   Say this

   Start from the objective and the constraints, not from the funds. Required return, risk tolerance, liquidity needs, time horizon and any restrictions. Then build the strategic asset allocation, then select managers within it.

   Then walk it

   1. Establish the mandate first: what return is required, over what horizon, with what drawdown tolerance, what liquidity is needed and what restrictions apply. Everything follows from these.
   2. Set the strategic asset allocation across asset classes. That decision drives the large majority of the variance in outcomes; manager selection is second-order.
   3. Then decide active versus passive by asset class. Use passive where markets are efficient and active where dispersion is high and there is evidence of persistent skill.
   4. Then select managers on process rather than past returns. Understand the source of the edge, whether the team is stable, whether assets have grown beyond the capacity of the strategy, and what the fee structure does to net returns.
   5. Then look at the combination rather than each fund alone. Correlation between managers is what determines portfolio risk, and three managers running the same factor exposure is one position with three fee loads.
   6. Then build in the governance: rebalancing rules, review triggers, and a plan for what would cause redemption. Deciding the sell criteria in advance is what prevents performance-chasing.

   Where candidates lose it

   Jumping straight to picking funds. The correct structure is objectives, then asset allocation, then managers, then monitoring. Also, ignoring correlation between managers, which is the most common real-world error in multi-manager portfolios.

   Expect next

   • What risk-return targets would you set for an institutional investor?
   • How do you judge whether a manager has skill or luck?
   • How would you build a portfolio for different client needs?

   Reported by candidates at MSCI (Risk Management, Remote, 2013); The Vanguard Group (Investment Research, Malvern, 2024). Source: Wall Street Oasis.

5. 066How do you distinguish manager skill from luck?Portfolio and riskHardsuperdayAsset managementMulti-manager allocation

   Say this

   You mostly cannot from returns alone, because the sample is too short. So you examine the process, the consistency of the attribution, and whether the returns come from the stated edge rather than from an unintended factor bet.

   Then walk it

   1. The statistical problem: distinguishing a genuinely skilled manager from a lucky one at conventional confidence levels can require decades of monthly returns. Three or five years tells you very little.
   2. So use attribution instead. Decompose returns into market beta, factor exposures and residual alpha. A manager whose returns are explained by a persistent small-cap value tilt is selling you beta at alpha fees.
   3. Check consistency with the stated process. If they claim bottom-up stock selection but the returns are explained by sector allocation, the process and the outcome do not match, which is a warning.
   4. Look at the breadth of the record: how many independent decisions produced it? A concentrated fund with three big winners has a much weaker statistical case than a diversified one with a consistent hit rate.
   5. Then the qualitative work: is the team stable, has the strategy scaled beyond its capacity, and has the process changed after the good years?
   6. The honest conclusion is that manager selection is genuinely hard and that the base rate of persistent outperformance after fees is low. An allocator who says that sounds more credible than one who claims a reliable method.

   Where candidates lose it

   Answering 'look at the track record and the Sharpe ratio'. The point of the question is that returns data is statistically almost useless over realistic horizons. Attribution and process are the substance.

   Expect next

   • How long a record would you need?
   • What is capacity and why does it matter?
   • Would you fire a manager after two bad years?

Firm tags come from public, anonymous candidate reports on Wall Street Oasis: strong signal, not sworn testimony. Firms are named as the places a question was reported, not as partners of Fin Maverick. Answers are written for this page to show how to think out loud; they are not scripts to recite.