Emerging Markets Credit/Distressed HF Interview Questions
This is aimed at the more senior folks. To make a long story short i surprisingly got an interview at a top tier EM credit hedge fund. I say surprising because I'm at a decently sized but not prestigious long only shop and certainly don't focus at all on distressed which I assume has to be top of their mind (full disclosure they saw my resume etc. so no shouldn't be "surprised").
Am I correct in thinking the discussion will mostly center around my resume and trade ideas/views on the market?
I'm thinking a good way to handle the distressed angle if asked is say "well I don't focus on it really at all given current mandate but this is my view on xxx situation"- that way I'm not claiming to be an expert but still showing initiative
What are good questions to ask the PM? I was thinking about asking philosophy on portfolio construction allocating to different sub sectors and then on how they approach position sizing for individual names, then adding something about how he sees role and tea, evolving?
I’m a mid career guy with a cushy long only gig- what trade offs should I be thinking about given this is multi manager?
Appreciate responses from anyone in EM, macro, credit or just very experienced hedge fund folks.
Lastly anyone have an idea how I snuck through? Could it be to mine me for ideas or because they have little interest?
Thanks in advance
Bump
brotherbear Bondarb Miss_Astro @Going Concern" BlackHat SirTradesaLot Martinghoul
TheFamousTrader , Anchor , rumplestiltskin
Can’t help much here but I seem to remember the book Diary of a Very Bad Year having a lot on EM credit and being an awesome book in general
You should find out what he actually wants in the role and if that fits your abilities and goals - the suck up questions don't matter and are honestly annoying. He is not mining your ideas and likely has a specific job in mind and 95% already made up his mind if he is hiring you or not based on your resume.
Your post doesn't sound like you even think you are qualified for the role tho, or it is not worth the risk, considering that you seem satisfied in your current gig.
Thanks for the response.
Have you seen a scenario like this where they interview less prestigious candidates when they could generally “have their pick”? All I can think of is maybe cheaper and also I have some random geographical and sector areas of coverage that may be unique (and a fit).
The thing I’m wrestling with is this would be an ideal role in say 3 years but as you suggest don’t think I’m up to the task now. I’m not thrilled in my current role but it is cushy and I do have a path to PM in the next 3-5 years but clearly PM at “womp womp” long only is arguably lower EV long term than sr analyst at top tier HF (at least I think?). Also some personal considerations (dependents) that make me more risk averse now.
Any other perspective is valued. Thanks.
What you tend to find is that a lot of funds want to hire guys who (i) have the technical skills to do the job, i.e. they know how to read an annual report and build a model and don't need their hand held, and (ii) are junior enough to be molded into thinking and working the way the fund/PM wants them to work. I got a job at a distressed debt fund coming from a ratings agency (S&P/Moody's) and I remember thinking to myself why didn't these guys just hire a desk analyst from a bank or another fund. But once you start working in the business you begin to realize that the relationship dynamics between you and your PM are paramount to your success. Many PM's don't want to hire some smart-ass guy who thinks he knows everything or will question how things are done based on his prior experiences. The finer details are learned on the job and we are not talking heart surgery here so if you have a decent IQ and are interested in investing you will reach the level of your peers pretty quickly.
Even though these comments are mostly corporate focused vs. say sovereigns I find this very very insightful- you answered my exact question about why not hire a desk analyst.
Super helpful thanks. I guess the weird part is I’d describe myself as more mid career but coming from non hedge fund the same probably applies
MMPM
Lmao distressed EM debt fund, can you spell “no creditor protection” ?
Perhaps this is well intentioned and in jest. However, it seems to highlight a blind spot for many, especially fundamental, wannabe investors on this site- building a moat around your expertise. To that point if you can make sense out of the chaos in EM distressed you can name your price as a PM and you better believe you will not be viewed as “replaceable” vs. your average equity long short analyst or say...PE professional.
So I've spent the majority of my time in EM and have traded and managed a book of credit (amongst other things) in EM at a multi-strat HF, so hopefully what I have to say is of some help.
Who cares how you got in? It doesn't matter. They might want to pick your brains on names without any intention of hiring you (this happens a lot). Or they could really need a spot and someone spoke warmly of you. Or anything in between. Doesn't matter.
Distress... Well you are in EM so I am sure you have seen more than your fair share of blowups, and messy situations, because that's what EM is all about. Volatility and uncertainty. Do you have any battle scars (and if you don't have you heard of any that you can speak knowledgeably about?). It helps. Everyone has EM scars. It's literally how EM people bond (no pun intended). The framework for workouts, seizing asserts, structuring etc, is much more wild west than some ho-hum process in DM (ie. US) where it really becomes a legal game with the usual players across spectrums of the credit/industry/instrument (they all know each other too).
If they ask you and you don't know much about distress, you can say, well I don't see much now, but I cover this name and its crap and it COULD find some stress/distress because of XYZ etc etc etc. As you know I am in a long only and we can't play that but if I was in this seat, I might look at this name in the 60s (or whatever) because of blah blah.
Questions to ask the PM? Dude, seriously? C'mon. You answered your own question. You are in the game. Ask him/her about their book. What are they in. What do they like? What don't they like? Why? What's their EM scar(s)? What markets have they historically liked? How have they changed? How is the book managed? Is it concentrated? Or not? How many positions? How are they sized? How are they hedged?
Know your names that you cover and like. Doesn't have to be all of them. But 2-3. Know them well, the bull and bear case entry, exit points etc. This will be easy for you, because, well, they are your names. Have an example of a great trade you put on. Have an example of a bad trade and what went wrong and what you learned.
Finally - you say "top tier" HF. Here's the question.. DO THEY MAKE MONEY? And have they made money in the last decade? Many "top tier" funds have not. Remember you are also interviewing them., so see if you like the person and if they are thoughtful, interesting, nice etc... You do not want to join a sinking ship which may force you to hunt for a job in 6-12 months, or work with a bunch of annoying, terrible, immoral people who will make your life miserable.
At the very least this will be a good experience for you and you'll learn a lot. Try to think of it as a conversation. You say you are mid career. This means you have experience and can (and should be expected) to hold your own.
Remember that there are tons of clowns in this industry, especially in EM that either don't make money or haven't in a while. In short you are inferior to no one.
Good Luck
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