Long/short, single-manager and asset management. The centrepiece is a stock pitch, plus markets awareness and how you think about risk.
A sample of the Hedge Fund / Asset Mgmt bank: the first 3 questions of every topic, with the model answers. 247 questions in total.
31 questions in this topic
Structure: one-sentence recommendation (long/short, and why), the business and how it makes money, the variant perception (what the market is missing), 2 to 3 catalysts, valuation and your price target with upside/downside, and the key risks with how you'd monitor them. The edge is a differentiated, defensible view, not consensus.
A business the market over-values for identifiable reasons: deteriorating fundamentals, accounting red flags, structural decline, unsustainable margins, or a catalyst that forces re-rating. Respect the asymmetry, shorts have capped upside and unbounded downside, so timing, catalyst and borrow/cost matter more than for longs.
The variant perception is the specific thing you believe that the market doesn't, and why it's wrong, a mis-estimated earnings power, an underappreciated catalyst, a misread of durability. Test it: what does the current price imply, and where does your view differ and why? If your thesis is "good company, will go up," that's consensus and has no edge. The edge is a differentiated, defensible view with a variant on numbers or time horizon.
28 more questions on Stock pitch, with model answers, inside.
19 questions in this topic
Have a current, specific view: the setup, why it's mispriced, the catalyst, and the risk. It signals you actually follow markets. Keep it defensible and be ready for pushback, they're testing reasoning, not a "right" answer.
Higher discount rates lower the present value of future cash flows, hitting long-duration, high-multiple growth stocks hardest (more value sits far in the future) and defensives/high-yielders via the bond-substitute effect. Rates also change the earnings backdrop (financing costs, demand). Be ready to reason about duration, not just "rates up, stocks down."
Higher rates raise discount rates, hitting long-duration, high-multiple growth stocks hardest (their value sits far in the future) and bond-proxy defensives via the yield-substitute effect, while benefiting some financials (net interest margins). Lower rates do the reverse. Reason about duration and the earnings channel, not just "rates up, stocks down".
16 more questions on Markets, with model answers, inside.
24 questions in this topic
By conviction and risk: higher conviction and lower downside → larger; more uncertain or correlated with existing book → smaller. Consider liquidity, volatility, correlation to other positions, and the fund's risk limits. Articulate a downside case and how much you'd lose if you're wrong.
A great business can be a poor investment if the price already reflects the quality (no margin of safety); a mediocre business can be a great investment if it's priced for disaster and improves. Return comes from the gap between price and value and how that gap closes, not from business quality alone. This "quality vs price" distinction is core to every pitch.
Decide what risk you actually want: if it's a company-specific bet, hedge out the market/sector (short an index or peer) so you isolate the alpha; if you're happy with the beta, run it unhedged and size accordingly. Hedges cost carry and can dilute the thesis, so hedge the risks you're not paid to take and keep the exposure you have an edge in.
21 more questions on Risk, with model answers, inside.
22 questions in this topic
Genuine interest in markets and being measured on the quality of your ideas; the intellectual honesty of a P&L; and alignment with the fund's style (value, growth, event-driven, quant). Reference their approach specifically rather than "I like stocks".
Pick a real one, state the thesis, what you missed, how you recognised it, what you did (cut, re-underwrote), and the lesson that changed your process. Funds want intellectual honesty and adaptability, being wrong is inevitable; how you handle it is the signal. Avoid blaming "the market was irrational."
You're measured on the quality of your ideas and their P&L, not on advising or executing others' deals: intellectual ownership and a direct feedback loop. You go deep on fewer names and take real positions. Reference the fund's style (value, growth, event-driven, quant) specifically and why it fits how you think.
19 more questions on Fit, with model answers, inside.
25 questions in this topic
Not necessarily. 10x is cheap only relative to the earnings' quality, growth and durability. A stable compounder at 10x is cheap; a cyclical at peak earnings or a structurally declining business at 10x can be expensive (the "value trap"). Cheapness is price versus intrinsic value, not a headline multiple: always ask "10x of what earnings, and how durable?"
A stock that looks cheap on trailing multiples but keeps falling because the business is deteriorating (earnings decline, no catalyst, capital destruction). Avoid it by checking whether the low multiple reflects a real, persistent problem, whether there's a catalyst to close the gap, and whether normalised earnings power justifies the price. Cheap needs a reason to re-rate.
Same tools, focused on downside: normalised (not peak) earnings, a realistic multiple in a re-rating, and scenario/sum-of-the-parts to find where the price goes if the thesis plays out. You're solving for the gap between an inflated current price and a sober intrinsic value, and pairing it with a catalyst and the cost/risk of the borrow.
22 more questions on Valuation, with model answers, inside.
22 questions in this topic
Buy the target (and sometimes short the acquirer in a stock deal) after a deal is announced, capturing the spread between the trading price and the offer as the deal closes. The return is the spread; the risk is deal break (regulatory block, financing failure, MAC clause): a rare but severe loss, since the target falls back to its unaffected price. It's "picking up nickels" with occasional sharp drawdowns.
A parent separates a division into an independent public company. Opportunities arise from forced selling (index funds dumping the smaller spinco), under-coverage, better incentives and focus post-separation, and hidden value unlocked when a conglomerate discount lifts. Both the parent and spinco can re-rate: a classic special-situations hunting ground.
Compare the annualised spread (offer price vs current price, over expected time to close) against the probability and cost of a deal break. Wide spreads price higher break risk (regulatory, financing, shareholder vote). You're paid the spread for underwriting deal completion; the tail risk is the target falling to its unaffected price if it breaks. Assess the specific closing risks, don't just chase yield.
19 more questions on Event-driven, with model answers, inside.
9 questions in this topic
Credit is about downside and probability of repayment: you're pitching that the bond's yield over-compensates for the actual default/recovery risk, or that a catalyst improves the credit. It's more asymmetric (capped upside at par, real downside), so covenant protection, seniority, recovery value and refinancing risk dominate: not the equity's growth story.
When the risk/reward favours the downside-protected claim: a stressed or highly-levered business where the debt is well-covered and yields attractively, or where you expect a restructuring that hands debtholders the equity at a low basis (fulcrum). Credit caps your upside but protects capital via seniority and covenants: you choose it when the equity's upside doesn't compensate for the risk of a zero.
It's the order in which value gets distributed in a liquidation or restructuring, senior secured debt is paid first (out of its specific collateral, then general assets), then unsecured or senior debt, then subordinated debt, then preferred equity, then common equity last. Understanding the waterfall tells you exactly how much cushion (or lack of it) protects any given tranche if enterprise value falls short of total claims.
6 more questions on Credit, with model answers, inside.
10 questions in this topic
The fulcrum is the tranche in the capital structure where value "runs out": partially recovered, often converting into the reorganised company's new equity. Distressed funds buy it at a discount to own the business through the restructuring at a low basis. Identifying the fulcrum requires valuing the enterprise and walking the waterfall: the core distressed skill.
Value the enterprise (going-concern or liquidation), then walk the waterfall by seniority to see which tranche is covered, partially covered (the fulcrum), or out of the money. Your return depends on your entry price versus that recovery and the restructuring outcome (cash, new debt, or equity). Small changes in enterprise value swing who's in the money: precision on valuation and the waterfall is everything.
It's the tranche of debt (or sometimes equity) that sits right at the point where enterprise value runs out, the securities senior to it get made whole (or close to it), the securities junior to it get wiped out or nearly so, and the fulcrum security is the one that converts into the reorganized company's new equity. It matters because that's typically where the real investment decision is, buying the fulcrum security gets you control of the post-reorg equity at a price set by the negotiation, often the highest-return, highest-conviction seat in the capital structure.
7 more questions on Distressed, with model answers, inside.
25 questions in this topic
A factor is a systematic driver of returns across many securities: value, momentum, quality, size, low-volatility, and growth. Factor investing tilts a portfolio toward rewarded exposures. Quant funds decompose returns into factor and idiosyncratic components to isolate genuine alpha from factor beta you could get cheaply. Know what each factor captures and its cyclicality.
Beta is return from exposure to systematic factors (the market, or style factors): commoditised and cheap to buy. Alpha is excess return from skill, uncorrelated to those factors. Investors pay hedge-fund fees for alpha, not repackaged beta; a big part of quant/risk work is separating the two so you know what you're actually being paid for.
A model tuned too tightly to historical data captures noise, not signal, so it backtests beautifully and fails live. Guard against it with out-of-sample/walk-forward testing, parsimony (fewer parameters), economic rationale for each signal, and skepticism of too-good backtests. A robust, simple, economically-grounded signal beats a curve-fit masterpiece.
22 more questions on Quant, with model answers, inside.
22 questions in this topic
Unbounded loss if the stock rises, borrow cost and recall risk (the lender can force you to cover), short squeezes and crowded positioning, dividends you must pay, and the market's upward drift over time. Timing matters far more than for a long: you can be right eventually but stopped out first. Size small, demand a catalyst, and respect the asymmetry.
Rising receivables/inventory outpacing revenue, growing gap between net income and cash flow, aggressive revenue recognition or capitalisation, frequent "one-off" add-backs, related-party transactions, auditor or CFO turnover, and stretched working capital. Each suggests earnings quality is worse than reported: a common short thesis is "the accounting flatters a deteriorating reality."
A stock priced for flawless, perpetual hyper-growth that faces decelerating fundamentals, competition, or a TAM/margin reality gap: the variant being that consensus extrapolates a fad. Catalyst = a growth or guidance miss that breaks the narrative. Manage the huge risk: crowded/high-borrow, squeeze-prone, and "the market can stay irrational": size small, demand a near-term catalyst, use a hard stop.
19 more questions on Short, with model answers, inside.
13 questions in this topic
Anchoring (to purchase price or a target), confirmation bias, loss aversion (holding losers, cutting winners), recency and herding (chasing performance), and overconfidence. Great investors build process to counter them: checklists, pre-mortems, written theses, and position discipline. Recognising the biases is table stakes; having a process that neutralises them is the edge.
It's the tendency to sell winners too early (to lock in a good feeling) and hold losers too long (to avoid realizing a loss and admitting being wrong). In practice it shows up as a portfolio where the average holding period on winners is much shorter than on losers, and where a PM will hold a deteriorating position "waiting to get back to even" instead of re-underwriting it fresh at the current price.
Anchoring is over-relying on an initial reference point (like your entry price, or the first price target you saw) when judging new information, confirmation bias is the tendency to seek out and weight information that supports what you already believe while discounting what contradicts it. They compound because once you anchor on a thesis or price target, confirmation bias makes you selectively notice evidence that supports that anchor and rationalize away evidence that doesn't, so the two together can keep you in a bad position long after the thesis has broken.
10 more questions on Behavioural finance, with model answers, inside.
13 questions in this topic
Massive flows into passive can distort relative prices (buying stocks by weight, not value), reduce price discovery, amplify momentum, and concentrate ownership in mega-caps: arguably creating opportunities for active managers in under-covered names while making index-level moves more flow-driven. It's a structural shift active investors must understand and can sometimes exploit.
A market order executes immediately at the best available price but gives up control over the exact fill price (you take whatever liquidity exists at that instant), a limit order specifies the worst price you'll accept but isn't guaranteed to fill at all if the market doesn't reach your price. The tradeoff is certainty of execution versus certainty of price, in a fast-moving or illiquid stock, a market order can get a much worse fill than expected (slippage), while a limit order can simply miss the move entirely.
The National Best Bid and Offer is the highest current bid and lowest current offer across all exchanges for a stock, brokers are required to give customers a price at least as good as the NBBO (best execution obligations). It matters because it sets the reference price for fair execution, market makers internalizing retail flow must match or beat it, and institutional traders working a large order watch how their activity moves relative to the NBBO to judge market impact.
10 more questions on Market structure, with model answers, inside.
7 questions in this topic
Enough to understand the key value drivers and to pressure-test the one or two variables the thesis hinges on: not a 10-tab model for its own sake. A focused model that captures the earnings power, the sensitivities that matter, and the downside beats an elaborate one that obscures the point. The output is a view and a range, not spreadsheet volume.
Write the thesis and falsifiers down in advance, review losers honestly, seek disconfirming evidence, re-underwrite periodically as if flat (would you buy it today at this price?), and respect pre-set exit rules. Detach ego from the position. The market punishes investors who anchor to a thesis or a cost basis: process and honest reappraisal are the antidote.
Start with why it is mispriced, because without a view on that you are just describing a company. Then: understand the business and how it makes money, build the unit economics, work out what the market is implying at the current price, and test that against your own numbers. Check the variant perception explicitly, which means naming what you believe that consensus does not. Size the downside before the upside. Finish with what would prove you wrong and what you would watch for it.
4 more questions on Process, with model answers, inside.
5 questions in this topic
Net interest margin and rate sensitivity, loan growth and credit quality (provisions, non-performing loans), fee income, cost/income ratio, capital (CET1) and payout capacity, and valuation on P/TBV vs ROE. The thesis is usually about the rate/credit cycle, returns above the cost of equity, and capital return. Banks are geared to rates and the credit cycle: frame the pitch around those.
Staples: defensive, steady demand, pricing power in inflation, valued for stability and dividends: the pitch is durability and margin/pricing. Discretionary: cyclical, sensitive to consumer confidence, incomes and rates: the pitch is the cycle, share gains, or a brand/turnaround. Know which lever (defensive quality vs cyclical/idiosyncratic upside) your thesis pulls, and the macro sensitivity of each.
Position in the cycle (semis are highly cyclical: inventory, capex, demand), end-market exposure (AI/datacenter, auto, mobile, industrial), technology leadership and node advantage, pricing/margins, capital intensity, and customer concentration. Value across the cycle on normalised earnings, not peak. The AI capex cycle is the current dominant driver, but respect the historical boom-bust cyclicality.
2 more questions on Sector, with model answers, inside.