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

Level

AnyCoreIntermediateHard

Type

AnyTechnicalMarket viewBrainteaserCaseFit

1. 060Tell me about recent trends a distressed manager would be affected by.Distressed and creditHardtechnicalOaktree Capital ManagementRisk · Los Angeles · 2022

   Say this

   Three things dominate: the maturity wall of debt raised in the cheap-money years now refinancing at much higher coupons, the rise of private credit changing who holds the paper, and much weaker documents, so lenders have fewer protections than the last cycle. Together they mean more stress with slower, messier resolution.

   Then walk it

   1. Start with rates and the refinancing wall. Loans issued at low single-digit coupons are repricing several hundred basis points higher, and for a leveraged borrower that can consume most of its free cash flow. Interest coverage, not leverage, is the binding constraint this cycle.
   2. Then private credit. A very large share of leveraged lending has moved from syndicated markets to direct lenders, so stress shows up in negotiated amendments rather than in visible secondary prices. Marks are held by the lender, which delays price discovery and makes the cycle look calmer than it is.
   3. Then documentation. Covenant-lite is standard, so there is no maintenance covenant to trip. Defaults happen at a payment date instead of early, which means companies arrive at restructuring with less value left and lenders have less negotiating leverage.
   4. Then liability management, which is the defining feature of the current cycle. Drop-downs, uptiering and other creditor-on-creditor transactions move collateral away from non-participating lenders. That makes intercreditor documents the central analytical exercise and raises the value of a blocking position.
   5. Then the composition. Stress has been concentrated in specific pockets rather than economy-wide: commercial real estate with office valuations and refinancing, some healthcare and consumer services, and highly levered businesses with floating rate debt.
   6. How that changes the job, which is the point of the question: fewer clean recoveries and more negotiation, so a manager values legal capability and the ability to build blocking stakes over screening for cheap paper. And a risk-first manager would say the honest part out loud, that spreads spent long periods too tight to be compensated for this, so patience and dry powder were the correct posture rather than forcing deployment.

   Where candidates lose it

   Giving generic macro commentary. This question is asking whether you follow the credit market specifically. The three details that land are the coverage ratio squeeze rather than leverage, private credit delaying price discovery, and liability management exercises. Refresh the numbers the week of the interview and name a real situation.

   Expect next

   • What is an uptier transaction and why do lenders sue over it?
   • Where in the market would you look for distressed opportunities today?
   • Why have default rates stayed lower than the rate move implied?

   Reported by candidates at Oaktree Capital Management (Risk, Los Angeles, 2022). Source: Wall Street Oasis.

2. 087Why is long-short so much harder to run in India than in the US?India and Category III AIFsHardtechnicalIndian hedge fundsCategory III AIFs

   Say this

   Because the short side barely exists in the cash market. There is no developed stock lending market, so almost all shorting happens through single stock futures, which restricts you to the names in the derivatives segment and imposes roll costs and position limits. The short book is therefore structurally narrower than the long book.

   Then walk it

   1. Start with the mechanics. India has no meaningful securities lending and borrowing depth. The SLB platform exists but volumes are thin, so a practical short is a single stock future, and only a limited set of names, roughly 200 or so, are in the futures segment at any time.
   2. That is the binding constraint. You can be long any of the two thousand tradable names and short only the large and liquid ones, so a classic pair trade in mid caps is frequently not expressible.
   3. Then the cost. Futures roll every month, and the basis moves with borrow demand and positioning, so the cost of a short is not a quoted borrow fee but a roll cost that can widen exactly when you most want the position. There is no term certainty.
   4. Then the position limits and margins. Exchange-level and client-level open interest limits, mark-to-market margin on the futures leg, and periodic regulatory tightening of derivative rules mean the short book has an operational overhead the long book does not.
   5. Then market structure. Retail and derivatives volumes dominate, index options turnover is enormous relative to cash equity, and domestic institutional flows into equity funds are steady and large, so the market has a persistent upward bias that penalises short books.
   6. So what actually works in India looks different: long-biased funds with an index hedge, cash-futures arbitrage, merger and event situations, and long-short expressed within the futures universe. Honest framing: India is a great market for long-biased alpha and a hard market for a market-neutral book, and most successful domestic Category III strategies reflect that rather than fight it.

   Where candidates lose it

   Answering with generic emerging market caveats about liquidity and governance. The specific, correct answer is the absence of a cash stock lending market and the resulting dependence on single stock futures, with all the universe, roll and limit consequences that follow. Naming the futures universe constraint is what shows you know the market rather than the idea of it.

   Expect next

   • How would you hedge a mid-cap long that has no future?
   • What is cash-futures arbitrage and why is it popular in India?
   • What would change if SLB volumes grew?

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.