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. 071How would you value an illiquid position for the monthly NAV?Financing, NAV and operationsHardsuperdayDistressed debtFund administration

   Say this

   By a written policy applied consistently, not by judgement each month. Hierarchy: an observable transaction price if there is one, then broker quotes, then a model calibrated to comparable market data, with the manager's own view last. Then document it, get it reviewed independently, and disclose the level.

   Then walk it

   1. Start at the top of the fair value hierarchy. Level one is an exchange price and there is nothing to decide. Level two is observable inputs, so indicative broker quotes on a similar bond or a recent trade in the same issuer's other paper. Level three is a model with unobservable inputs, which is where the real work and the real risk sit.
   2. For a private or restructured equity stake, a defensible approach is a multiple on the latest reported earnings against listed comparables, plus an illiquidity discount, cross-checked against the last primary round or any secondary transaction.
   3. For a stressed loan, recovery analysis: enterprise value, the waterfall, then a discount rate reflecting the time and uncertainty of the process. Mark the claim, not the face amount.
   4. Governance is most of the answer. Broker quotes from at least two independent sources where possible, a pricing committee that signs off, a written valuation policy reviewed by the board, the administrator striking the NAV rather than the manager, and an annual audit that tests the level three marks.
   5. Consistency matters more than precision, and this is the part to say out loud. A defensible method applied every month is better than a more accurate method applied when it suits. Changing methodology when a mark is inconvenient is the classic abuse.
   6. Then the disclosures that let an investor judge: percentage of NAV in each level, the discount applied, and a sensitivity showing what NAV would be at plus or minus a reasonable range on the key input. If the position is large and genuinely unmarkable, the right answer may be to side-pocket it rather than to invent a number.

   Where candidates lose it

   Giving a valuation technique and no governance. The question is really about controls: who marks it, who checks the marker, and how you stop the method from changing when the number is unhelpful. Also remember to mention that side-pocketing can be the correct answer rather than marking something you cannot mark.

   Expect next

   • What if the two broker quotes differ by 15 points?
   • Who signs off on a level three mark?
   • When should a position be side-pocketed instead?

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.