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. 074You are on an expert network call and the expert starts describing their current employer's unreported quarter. What do you do?Compliance and research processHardsuperdayMulti-manager platformsCompliance

   Say this

   Stop the call immediately, say clearly that you cannot receive that information, and end it rather than steer it. Then report it to compliance the same day, document what was said, and let them decide whether the name goes on a restricted list. You do not get to make that judgement yourself.

   Then walk it

   1. Interrupt, do not redirect. 'I have to stop you there. I cannot discuss unreported financial results for your employer.' Trying to move the conversation along while having already heard it does not help you.
   2. End the call. Continuing after a breach, even on other topics, looks like you kept fishing, and the call is recorded or logged by the network.
   3. Report it immediately and in writing to compliance, with the date, the expert, the network, and what was said. Self-reporting is the single most protective thing you can do, and delaying it is what turns a mistake into a career-ending problem.
   4. Expect the consequence and accept it: compliance will likely restrict the name, meaning nobody at the firm can trade it until they clear it. Even if you were already long, you may be frozen. That is the correct outcome.
   5. Say the structural controls that should have prevented it, because it shows you understand the framework rather than just the etiquette. Pre-approved question lists, chaperoned calls, prohibitions on speaking to current employees of public companies you cover, mandatory network training, and post-call logging.
   6. Then the honest point about incentives. The information would have been valuable, and that is exactly why the rule has to be absolute rather than a judgement call in the moment. Every insider trading case involving expert networks, including the ones that put people in prison, started with someone deciding this once was probably fine.

   Where candidates lose it

   Giving a soft answer: 'I would change the subject' or 'I would not use it in my model'. Both are wrong. Once you possess material non-public information you are restricted whether you use it or not. The three required beats are stop, end, report. And never say you would check with the PM first; compliance is the escalation path.

   Expect next

   • What if your PM already has a large position in that name?
   • What is the firm's obligation once you report it?
   • How do you structure expert calls to avoid this?
2. 075What is material non-public information, and where exactly is the line?Compliance and research processHardtechnicalComplianceMulti-manager platforms

   Say this

   Material means a reasonable investor would consider it important in deciding whether to trade, which in practice means it would move the price. Non-public means it has not been broadly disseminated. Both tests have to be met, and the difficulty in real life is almost never the definition, it is the mosaic question.

   Then walk it

   1. Materiality examples that are clearly over the line: unreported results or guidance, an unannounced deal, a pending regulatory decision, a major customer loss, a CEO departure, an unannounced buyback.
   2. Non-public means not broadly disseminated. A fact told to one hedge fund, or sitting in a document that was not distributed, is non-public even if it was not marked confidential. Being told it by accident does not make it public.
   3. The legitimate discipline is the mosaic theory: assembling many individually non-material, public or lawfully obtained pieces into a conclusion nobody else has. Channel checks, satellite imagery, credit card panels, job postings, pricing scrapes. That is the entire alternative data industry and it is legal precisely because no single piece is material and non-public.
   4. Where the line actually blurs: a supplier telling you their shipments to a customer are down sharply. Non-public, arguably material, and the supplier may have a duty. The test involves how you got it and whether anyone breached a duty in passing it on, which is the misappropriation and tipping analysis.
   5. So the practical rules are procedural, not intellectual. Restricted and watch lists, pre-clearance of personal trades, chaperoned expert calls, information barriers between pods at platforms, and a habit of escalating anything ambiguous rather than resolving it yourself.
   6. The honest thing to say: the rule is asymmetric on purpose. The cost of escalating something harmless is an hour of compliance time; the cost of being wrong is criminal. So I would rather be the analyst compliance hears from too often than the one they hear about from a regulator.

   Where candidates lose it

   Trying to look sophisticated by arguing about grey areas. Interviewers are checking your instinct, and the correct instinct is to escalate rather than adjudicate. Do mention the mosaic theory, because it shows you know where the legitimate edge lives, but pair it with the procedural controls.

   Expect next

   • Is a sell-side analyst's unpublished view MNPI?
   • How do information barriers work between pods?
   • Where does alternative data cross the line?
3. 076How can you make a financial model detailed enough to be useful but simple enough that you can cover a lot of companies?Compliance and research processHardtechnicalBalyasny Asset ManagementEquity Research · New York · 2026

   Say this

   Model the two or three drivers that actually move the stock in detail and leave everything else as a ratio. The rule I use is that a line gets its own build only if a reasonable disagreement about it changes my target price by more than a few percent. Everything else is a percentage of sales.

   Then walk it

   1. Start from the drivers, not the statements. For a subscription business that is subscribers, ARPU and net retention. For a retailer it is store count, sales per square foot and gross margin. Those get real builds with monthly or segment granularity.
   2. Everything else gets a ratio: SG&A as a percentage of sales, D&A off a simple schedule, working capital on days, capex as a percentage of sales, tax at the guided rate. Resist the urge to build a full three-statement cascade for a name you are screening.
   3. Standardise the template across the coverage universe. Same rows, same order, same colour convention for inputs, same output block. Then updating twenty models after earnings is a mechanical exercise, and you can compare names line by line without re-reading each file.
   4. Tier the coverage explicitly. Five or six core names get deep models with segment detail and a channel-check overlay; twenty to thirty monitored names get a driver model with consensus alongside; the rest get a screen. Coverage breadth comes from the tiering, not from making every model thinner.
   5. Build the comparison in rather than bolting it on. Every model should show consensus next to my numbers and the implied valuation at a range of multiples, because the output I actually need is the gap versus the street, not a standalone forecast.
   6. The limitation to state: a simplified model will miss the thing that was in the footnote, so the trade-off is real. I manage it by re-reading the filings on the core names properly and accepting that on tier three I am running a screen, not a thesis. Pretending a thin model is a deep one is how people get caught.

   Where candidates lose it

   Answering 'keep it simple' with no decision rule. The interviewer wants the criterion you use to choose what gets detail. The materiality test, the driver-versus-ratio split and the tiered coverage model are the substance. And say the cost of simplification honestly, because at a platform you will be asked to cover more names than you can model deeply.

   Expect next

   • How many names can you genuinely cover properly?
   • What would you always model in detail regardless of the sector?
   • How do you update twenty models in an earnings week?

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

4. 077Walk me through your research process on a new name.Compliance and research processIntermediatetechnicalLong-short equityMulti-manager platforms

   Say this

   I work backwards from the question that decides the stock. Understand the business and what the price implies, find the one or two variables the thesis turns on, then spend almost all the time on those. The goal is not to know everything, it is to have an edge on the thing that matters.

   Then walk it

   1. Day one is the price. What does today's valuation imply about growth, margin and duration? A reverse DCF or an implied-multiple check tells me what I have to disagree with, which stops me doing a month of work on a stock that is fairly priced.
   2. Then the primary documents: the last three annual reports, the segment notes, the accounting policies, and the last eight quarterly transcripts read back to front so I can see which promises were kept. Filings before sell-side notes, always.
   3. Then the industry structure. Who are the competitors, where does the profit pool sit, who has pricing power, what are the barriers, what is the customer's alternative. This is where the durability question gets answered and it is what business judgement actually means.
   4. Then identify the crux and state it as a question with a number attached. 'Does gross margin reach 42 percent by 2028?' Then the work plan follows: channel checks, pricing data, competitor disclosure, supplier commentary, whatever bears on that number specifically.
   5. Then build the model to the drivers, put consensus next to my numbers, and write a one-page thesis with the variant view, the catalyst, the bear case with a price, the falsifiers and the sizing. If I cannot write it in one page, I have not found the crux.
   6. Then the falsification step, which is the part that separates research from advocacy: go and find the best bear argument, ideally from someone short the name, and see if it survives. And say the honest limitation, that time is the constraint, so tier three names get a screen and a model rather than this whole process.

   Where candidates lose it

   Describing a linear process that ends with a recommendation. A hedge fund process starts with what the price implies and converges on one crux. Candidates who say 'read the 10-K, build a model, do comps, make a recommendation' have described a training programme, not a research process. Name the crux and the falsification step.

   Expect next

   • How long does that take and what do you cut when you have two days?
   • What is the crux on a name you are following now?
   • How do you find the best bear argument?
5. 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.