Hedge Fund Interview Preparation

Hey Guys,

I have a hedge fund interview/informational where I’m meeting the PM. What I wanted to know is what should I study and prepare for (such as technical/behavior questions)? I recently just graduated from college this may and don’t have any IB/HF experience. Thanks for the insight.

 

First of all congrats, I'd also say stay current with market news. End of year trends and potential future trends also would be nice to talk to. Maybe also bring up some stocks that you have been following and weather they will increase or decrease and why etc. Things like this will also look well I think.

I'm curious to find out tho how did you get this interview? With no IB experience I give you a lot of credit in getting this interview.

 
Investor1:
I doubt it will be any technicals because this particular fund uses an algorithm to trade.

Don't you think highly computerized/algorithmic shops will ask you highly technical questions? They may not be on DCF or LBO, but I would expect receive some brain teasers, pure math/prob/stat questions and etc.

If the whole system is computerized and it's working well, why do you think they need you? If they are hiring anyone, they are probably looking for smart people who can enhance the trading system.

that's just what i think, unless you applied to an admin position

 

Here's the scoop:

They are looking for an extremely dependable individual to execute their trading stratgy, which is this funky algorithm created by one of the founders/partners that happens to have negative correlation, reduced drawdowns and enhanced performance. The trader is going to work independently during the evening/night market hours for the Asian/European markets. They specifically say that reliability and a high level of personal integrity are musts. Market experience is helpful but not required. An excellent long-term opportunity for a quant. oriented night person with an interst in the financial markets.

I already had a phone interview with them today and even before our conversation ended, the interviewer asked me to come in to their offices this Thursday (talk about quick progress). It was all fit (no technicals). I'm really thinking that the trading will be exactly like what the interviewer said - less market intuition and probability etc.. but more being able to follow the computer's commands which read out what the algorithm says to do.

 
EuroMonkey:
I've got this interview coming up for a very large hedge fund. I'm in 2nd year IBD. Basically, what should I know going into the interview and how can I best prepare?

Apart from showing off what I did in banking, understanding the different HF strategies and having some investment ideas of my own, what else would help (input on the abovementioned also welcome!)?

Understand the investment strategy of the firm you're interviewing at. Do your homework on the founder and try to understand who his influences are and motivates them. Go through a few of their 13F filings and reverse engineer their old/current investments. Try to understand why they made the investment(s).

 
Best Response

description sounds like the dudes that execute trades at the firm i work at. essentially, whether you are a head trader or jr trader.. it's a support role... you support PMs.

its definitely better than back office..

oh and the part about maintaining good relationships with brokers and etc.. well i think you'll like that alot. think of it as endless free drinks after work and you rarley have to fork out money for lunch and dinner... you'll also will get free tickets to sporting events...

although ^^^ that heavily depends on how big the HF is... if you work for multi $BB HF, you will get treated very well due to the amount of fee your firm would generate. also, the degree of free shit depends on whether your head trader is free cool with sharing the spoil. if not, you probably wont see shit other than free sushi time to time that new guys on the street brings when they make their round.

 

Disclaimer: I only interviewed for a few L/S equity HFs, so maybe it's not quite as relevant for what you're doing.

I found that HFs did not care quite as much about deal experience as PEs did because you don't really acquire companies (obviously some funds do)... so understanding how an M&A deal works is not as relevant. Of course, if they really do merger arbitrage, this could be off.

They asked me a lot about my own investment ideas and what I had invested in before, so I would definitely focus on those.

I wouldn't spend too much time on accounting/finance/modeling... obviously you know the basics and I think that's more than enough.

HFs may also ask you brain-teaser or pure math questions - they did that to me a couple times, whereas PEs do not at all - so you may want to review those as well.

 

i would say: 1) have a long idea and a short idea modeled and fleshed out, preferrably in a write-up (heard this from a pm at a $1.3 bn fund)

2) have a comfort with basic acct., but moreso, with financial statement analysis, and being able to pick out oddities in a company (if you're a coverage banker, then this is where all the bs comp spreading you did might start coming into play)

3) if you bring up an industry, know the multiples / trends in that industry

4) read seekingalpha.com, 24/7 wall street, or other hedge fund/investment blogs like these to prep

those are the tips i would have; going through this myself, best of luck!

 

they are very different from anything else, and are all very similar, (after all hedge funds are all identical). What they do is put you at a computer with 100,000 to invest and you have 10 minutes to double that. Win and your in, lose and your not.

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