Hedge Funds
Prepalyst has 21 long/short equity interview questions with model answers, covering variant perception, catalyst mapping, short construction and sizing. Every question is graded on technical accuracy, completeness and interview communication. Practice is free.
An accessible calculation that tests whether a candidate can connect earnings to an equity valuation.
A company earns $120m of net income and has 60m diluted shares. Its share price is $30. Calculate EPS and P/E. If earnings rise 10% next year and the P/E stays unchanged, what share price does that imply?
A foundational valuation question before candidates discuss share-price upside.
A company has 100 million shares at $20, $500m of debt and $200m of cash. Calculate its market capitalisation and enterprise value. Why does the distinction matter to an equity investor?
A first-round screen for candidates new to equity investing.
What does it mean to be long a stock and short a stock? Why might a fund hold both at the same time?
A basic stock-pitch follow-up used to separate a view from a tradeable view.
What is a catalyst in a stock pitch? Give two examples and explain why an undervalued stock can still be a poor investment without one.
An introductory portfolio-construction question at fundamental hedge funds and multi-manager platforms.
You prefer Company A to Company B, two similarly sized online travel businesses. Explain how a long A / short B pair trade differs from simply buying A. What must be true for the pair to work?
A first-round long/short equity question testing whether a candidate distinguishes results from expectations.
A company reports quarterly EPS of $1.10 versus consensus of $1.00, yet its share price falls 8% that day. Explain how that can happen. What would you check before deciding the market reaction is wrong?
A practical research exercise used after an interviewer asks for an investable idea.
Consensus expects a retailer to deliver $1,000m of revenue and a 10% EBIT margin next year. You believe revenue will be $1,050m and margin 11%. How do you translate that into an earnings variant view, and what evidence…
Funds ask this to assess both research capability and compliance judgement.
How would you conduct primary research on a retailer you're considering shorting? Where is the legal line?
A portfolio-construction follow-up at fundamental funds and multi-manager platforms.
You estimate a stock has 30% upside in your base case, 10% downside in a bear case and 50% upside in a bull case. How would you decide whether it should be a 1% or 5% position?
An earnings-season question that tests whether you can separate headline results from durable economics.
A company beats quarterly EPS by 12%, but revenue is in line. How would you decide whether the beat improves your investment thesis?
The question behind every stock pitch. Funds want to know how you generate ideas, not just evaluate them.
Markets are broadly efficient. Where do you actually find a view the market doesn't already hold?
A stock-pitch challenge used to test whether a candidate can distinguish valuation caution from a tradeable short.
A software company trades at 20x forward revenue, growth is slowing, and you think the multiple should eventually fall to 12x. Is that enough to short it? What additional work would turn the view into an investable short…
Tests whether you understand what your P&L is actually exposed to.
You're long 100% and short 60% of NAV. Are you market neutral? What exposures remain, and how would you hedge them?
The question that separates long-only candidates from long/short candidates.
Walk me through how you build a short position. What makes a good short, and how is the analysis different from a long?
Asked immediately after a stock pitch at any fund.
You've pitched a long with 40% upside and 15% downside. The PM asks what size you'd put on. Walk through your answer.
A hedge-fund position-management case separating thesis evidence from P&L emotion.
You own a 4% long position in a payments company. The stock moves, new evidence arrives and portfolio risk tightens. Decide whether to add, hold, hedge, trim or exit before writing the PM update.
A long/short equity pod interview testing whether an analyst can separate price action, thesis evidence, exposure and catalyst risk during a drawdown.
You are the analyst on a market-neutral consumer-internet book. A core long sells off through earnings, sector correlation rises and a new operating datapoint challenges part of the thesis. Make the exposure, thesis,…
An investment-committee scenario that tests whether you update a thesis without anchoring to your entry price.
You own a 4% long position. The stock falls 25% after management cuts annual revenue guidance from 18% growth to 8%, blaming a delayed customer implementation. Management maintains its long-term margin target. Walk…
A fundamental long-short interview after an analyst identifies a credible earnings disagreement.
You believe consensus overstates a company's earnings power, but the next visible reporting event is six months away. How would you turn the thesis into an investable short rather than a valuation opinion?
An offer-level case used to test whether you can short valuation without ignoring quality and timing risk.
You think a high-quality software company is 35% overvalued because consensus assumes 30% growth for three more years. The company has 120% net revenue retention, 80% gross margins and a strong balance sheet. Would you…
A live scenario question. Funds want to see how you behave under loss, not in theory.
You're short a stock that has risen 40% in three weeks on no fundamental news. Your thesis is unchanged. What do you do?
Write your answer, get it graded on technical accuracy, completeness and communication, and see exactly which mechanic you missed.
Firm names indicate where a question type is commonly reported in interviews. They are not sourced from, endorsed by, or affiliated with the firms named.