Hedge Funds interview preparation

Long-short equity, macro, event-driven, distressed, multi-manager platforms and the Indian Category III landscape. Every question is either traced to a named firm from a public candidate report, or tagged at desk level when we could not trace it — answers lead with the point, then the mechanism, then the limitation.

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100 questions, mapped to the firms that asked them

Questions
100
Traced to a firm
39
Firms
16
Updated
September 2026
Asked at
All firmsMan Group10Balyasny Asset Management7Bridgewater Associates3D.E. Shaw3Apollo Global Management2KKR2Oaktree Capital Management2Point722Squarepoint Capital2AQR Capital Management1Baupost 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
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  1. 021Walk me through the mechanics of borrowing a stock to short it.Short sellingCoretechnicalLong-short equityPrime brokerage

    Say this

    You locate the stock through your prime broker, borrow it against collateral, sell it in the market and hold the proceeds. You owe a borrow fee and any dividends the lender would have received, and you must return the same shares when you cover or when the lender recalls them.

    Then walk it

    1. Step one is the locate. The prime broker finds shares, usually from custody accounts of long-only holders, index funds or other clients, and confirms availability before you can legally sell short in most jurisdictions.
    2. Step two: the loan is collateralised, typically at 102 to 105 percent of market value, marked daily. The lender holds your cash or securities collateral, so they carry little risk.
    3. Step three: you sell the borrowed shares. The proceeds sit with the prime broker and earn a short rebate, which is a rate below the risk-free rate. The gap between the rebate and the market rate is the broker's cut plus the borrow fee.
    4. Step four: economic obligations while short. You pay the borrow fee, daily accrued, and you reimburse the lender for any dividend. Both are real costs against the thesis.
    5. Step five: the borrow is not term. It is recallable at will in most equity markets, so if the lender sells the underlying or wants the shares for a vote, you can be bought in at the worst possible moment.
    6. Also worth naming: the lender keeps the economic exposure and loses the vote, which is why voting-record dates cause borrow to tighten and why hard-to-borrow names can see fees spike from 50 basis points to double digits in a week.

    Where candidates lose it

    Describing a short as simply 'selling something you do not own' and stopping. Every practical constraint on a short book is in the mechanics: locate, recall, collateral, rebate and dividend obligation. Get the rebate direction right too. You do not earn the full risk-free rate on the proceeds.

    Expect next

    • What happens if the lender recalls the shares?
    • Who is lending the stock, and why?
    • What is naked shorting and why is it restricted?

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.