Hedge Funds interview preparation

Questions

100

Traced to a firm

39

Firms

16

Updated

September 2026

Asked at

All firmsMan Group10Balyasny Asset Management7Bridgewater Associates3DED.E. Shaw3Apollo Global Management2KKR2Oaktree Capital Management2Point722SCSquarepoint Capital2ACAQR Capital Management1BGBaupost Group1Coatue Management1HPS Investment Partners1Northern Trust1Viking Global Investors1Wolverine Trading1

Topic

All topicsStrategy taxonomy8Stock pitch10Short selling6Portfolio construction8Risk and drawdown8Performance and alpha7Event-driven and merger arb8Distressed and credit5Fund structure and economics7Financing, NAV and operations6Compliance and research process5Quant and systematic6India and Category III AIFs5Career and fit11

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Type

AnyTechnicalMarket viewBrainteaserCaseFit

1. 078Here are the financial statements of three unnamed companies. Work out what kind of business each one is.Compliance and research processHardcase studyHPS Investment PartnersSpecial Situations · London · 2021

   Say this

   I would read four things in order and narrate as I go: the asset side of the balance sheet, the shape of the cost structure, the working capital cycle, and the capital intensity. Those four together identify a business model within a couple of guesses, and the reasoning is what is being graded, not the final label.

   Then walk it

   1. The balance sheet tells you most of it. Heavy PP&E means manufacturing, utilities, telecom or hotels. Heavy inventory with no PP&E means a retailer or a distributor. Almost no assets but large receivables means services or consulting. Large intangibles and goodwill means an acquisitive or a software business. A balance sheet dominated by financial assets and matched liabilities means a bank, an insurer or a lender.
   2. Then margins and their shape. Gross margin above 70 with heavy sales and marketing is software. Gross margin in single digits on huge revenue is distribution, commodity trading or grocery. High EBITDA margin with heavy depreciation is infrastructure-like, so telecom, towers, pipelines.
   3. Then the working capital cycle, which is the most diagnostic single item. Negative working capital with large payables and fast inventory turns is a supermarket or a restaurant chain. Large deferred revenue is subscription software. Long receivables and inventory days is heavy industry or project work. Receivables that are the business are financial services.
   4. Then capital intensity and leverage. Capex above 15 percent of sales with high depreciation says utility, telecom or semiconductor fab. Very high leverage with stable margins says regulated or contracted cash flows. High leverage with cyclical margins says a leveraged buyout.
   5. Then cross-check with one specific tell per hypothesis. A retailer has operating leases now capitalised as right-of-use assets. An insurer has technical reserves. A hotel has both heavy PP&E and high operating leverage. Say the tell you are looking for before you look for it.
   6. Then commit and quantify your confidence: 'Company A is a grocery retailer, and I am confident because of negative working capital, 25 percent gross margin, 3 percent EBIT margin and inventory turning in under 30 days. If I am wrong, it is a food distributor, and the way to tell them apart is store-level assets versus warehouse assets.' Naming the alternative and the discriminating test is what a credit interviewer is looking for.

   Where candidates lose it

   Guessing early and then defending it. This is a pure reasoning exercise: narrate the evidence in order and let the conclusion fall out. Also, do not neglect the working capital cycle, which is more diagnostic than the income statement. And always name your second-best hypothesis and the test that would separate them.

   Expect next

   • Which of the three would you lend to, and on what terms?
   • Which has the most operating leverage?
   • What single extra disclosure would you ask for?

   Reported by candidates at HPS Investment Partners (Special Situations, London, 2021). Source: Wall Street Oasis.

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.