How do I prepare for L/S interviews (Tiger Cubs, Viking, etc.)
I'm a 2nd year PE associate starting to get invites to interview with hedge funds. So far I'm only considering L/S SM. What kind of questions will I be asked in interviews? What does the interview process typically look like?
They can ask you whatever the hell they want.
No firm has the same process. This is not a factory like IB and PE.
I interviewed at Glenview for the L/S investing team.
Very very focused on market data points and open-ended technical questions, like, what would the beta be for Company A with xyz characteristics vs. Company B with abc attributes.
They made me fill out a two page sheet of just market based questions.
How would you screen for new investment opportunities in 2024? How would you determine entry and exit points?
Ultimately, they are very smart people that want to see how you truly “think”. It’s hard to prepare for it, but the one factor that is controllable is knowing market conditions and having a view on market forces.
They didn’t ask me IB or PE type of questions. Hope it helps and good luck.
Extremely helpful. Thank you.
Any chance you interviewed anywhere else similar?
Yes. Coatue and Monarch, which are tech focused LS and distressed debt focused funds, respectively.
Coatue was industry focused. I did a lot of deal work in tech and software. Questions were around me sector knowledge.
Ultimately, hedge funds aren’t for me. I don’t think I’m smart enough.
Yes, you make more $ than PE, but it’s less stable than PE imo - you’re at the mercy of funds’ performance and your own P&L a bit, which can move vastly week over week; exacerbated by LP redemptions that can happen at almost anytime.
I just find that to be too stressful to manage LT and decided to stay in PE.
Can I pm you
Sure
Hey, can I pm you for more about your experience w/ Glenview?
Bump - interested in moving to a hedge fund after PE but don't really know where to start. I don't know a lot of hedge fund terminology and wanted to see if there's a set of resources out there that people recommend to get ready for interviews
Following
Following up here to see if you found any resources
Your interviewer won't expect you to know all the public market nuance given your background. Just listen to every podcast with a SM and MM you can to pick up on it. Fundamental Edge is a good place to start for more pod style.
They will almost certainly ask you something you would never expect. I was being asked about options pricing models, bond math, stats theory questions, etc. in my interviews for an equities pod role. It's to see if you can think critically and figure it out vs. having things memorized in advance.
Not a great answer but the way to be prepared is to just know enough to be able to figure things out on the fly and be aware of current affairs in the market - especially whatever your interviewer focuses on.
I worked at citadel. The guy above is correct. There is nothing to prepare
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I would probably have a stock pitch handy as well. You'll more than likely end up doing a case study but some folks will ask you to pitch one regardless. May not be the most fleshed out thesis but good to have in your back pocket in case they ask (I'd say it happened ~50% of the time when i interviewed). If you go on YouTube and search for the Sohn Conference you can see some examples of investment pitches which should give you a better flavor of how a public markets pitch is / how public equities folks think. I would highly recommend NOT pitching a name that they own, and would prob avoid names in their sector if you can avoid it.
If you have deals from your time in PE listed on your sheet, would freshen up on the numbers and be able to walk through the investment thesis with them. If your PE focus has been in a particular sector, I'd also freshen up on the public co's in that space and you can talk about market trends etc as well.
As other's have said, from a technical standpoint its not like PE or IB where there's a list of questions to memorize (although I think there are some interview lists out there). More going to be about how you think and process information, which is more often than not incomplete and uncertain. Some examples that I can remember (it's been a few years) would be like there are two identical companies in the same industry, they have the same growth rates and margins; one has zero net debt and the other is 3x levered > which will trade at a higher EPS multiple?
On the more behavioral side, they are going to ask why you want to go into public markets / leave PE, and more than likely why their fund specifically. Other than that, it'll be the typical behavioral stuff like telling your story, times you've made mistakes, etc etc
Curious, why not pitch a name in their sector? Was under the impression you should, to show interest & knowledge of the sector. Will you just get grilled since they'll likely know more about the name than you?
yes, and everything you say correct is getting a follow up q and everything u say wrong is gonna get picked up
Hey there! Not sure if you're still active but had a question
I felt similarly about technicals when I interviewed for public shops -- they could ask any variety of technical questions and there was no consistency across firms, though obviously the concepts they were testing were probably similar
Did you do anything to better prepare yourself for technical questions like this? I'm trying to understand how I could continue to get better on concepts like that.
My thinking here is that the levered business should trade at a higher multiple because more leverage means more interest which means EPS down but the market cares about the underlying business not the capital structure so the EV/EBITDA would be the same but PE is higher for the levered business. Is that correct? ChatGPT disagrees with me
Hi! I work at a MM, and you are correct that the levered business will have a higher EPS because more leverage = more interest, but this question is asking about your understanding of market multiples. Leverage is a proxy for risk, and thus the levered business will, in almost all cases, have a lower EPS multiple than the unlevered one...This is also why they included growth rates, because in a case where business X is 3x levered with 30% growth rate and business Y is 0x levered with 10% growth rate, then ofc multiples will be higher for X than Y because of GR. But because businesses are essentially the same, then the less risky one will be traded at a higher multiple.
So folks at sector focused funds may have differing views but yeah you hit the nail on the head. Obv if you crush that it'd give you a huge leg up but a big risk. The point should more be around showcasing your ability to construct a thesis and have support for it vs. necessarily an actionable investment for the fund (that'll come in the case study). The two caveats i'd add to my inital comment:
- The pitch shouldn't be too stylistically different from the fund strategy - if its a deep value fund you prob should pitch an unprofitable tech go you value on rev mults but you'd prob be fine with a GARP-y name and just frame it as "this may not fit your strategy, but i think going long X is a great setup...
- if you are say a sector-coverage banker / sector-focused PE associate interviewing for the same sector at a fund - you are prob going to want ideas in that sector.
Know how depreciation flows through the 3 financial statements
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