Front Office Investing interview prep.

Behavioural questions to expect

1. Walk me through your CV.
2. Tell me about your most impressive piece of research or a company you know well.
3. Tell me about a weakness, a failure, or feedback you've received and worked on.
4. Why long-only asset management — why not the sell-side, a hedge fund, or private equity?
5. Our house style is house style. Why does that style suit you?
6. Why the firm?
7. How would you describe the firm's investment philosophy and edge in your own words?
8. Why does active long-only management add value in a world of cheap passive — what's the edge?

Technical concepts to master

• Three financial statements — connections you'll be probed on

  Income statement (IS) overview · Balance sheet (BS) overview · Cash flow statement (CFS) overview · Statement connections — the canonical question · Prepaid expense scenario

• The three core valuation methodologies

  Discounted Cash Flow (DCF) · Public Company Comparables (Comps) · Precedent Transactions · When each is most relevant · Methodologies you specifically would NOT use

• Enterprise Value vs Equity Value — the bridge

  Equity Value (Market Cap) · Enterprise Value · The bridge — Equity Value → Enterprise Value · Why cash is subtracted · Which multiples use EV vs which use Equity Value

• The long-only stock pitch

  The recommendation + position · The thesis + variant view · Valuation + intrinsic value · Catalysts + sell discipline

• Portfolio construction + risk

  Position sizing by conviction · Active share + tracking error · Source of funds + the active bet · Sector + factor exposure

• The active-management edge + alpha

  Active vs passive — the honest case · Where the active edge persists · Alpha + information ratio · Behavioral + horizon arbitrage

Practical drills

• A company will earn $5.00 forward EPS. Peers trade at 16x forward P/E; you think the right multiple is 18x given quality + ROIC. Current price is $76. Your fund is $1bn AUM with a 50-stock concentrated mandate (typical sizes 1-5%). (a) What's your intrinsic value and the upside? (b) What position size would you propose for a high-conviction long, and what's the $ allocation? (c) If the name has a 0.5% weight in the benchmark, what's the active bet in bps?
• Pitch me a stock for the flagship fund. 5 min prep, 2-3 min delivery. Land a recommendation, an intrinsic value, an upside %, and a suggested position size, and be ready to defend the thesis, the valuation, the catalysts, and the sell discipline for 10-15 min.
• You're recommending a name for the flagship fund (benchmarked to benchmark). Walk me through: (a) why it fits the mandate, (b) what the active bet vs the benchmark is, (c) how you'd size it and what you'd trim to fund it.

Smart-question anchors

• Mandate + benchmark - the fund's style, benchmark, active share, and how the team frames the alpha bar
• Idea-to-position - how analyst ideas become positions, the PM's role, and the sizing / conviction discipline
• Portfolio construction - concentration, holding period, sell discipline, and how the team thinks about active risk
• Style + market regime - how the house style is holding up, recent over- / underperformance, and the team's read of the cycle
• Year-1 trajectory - how a junior analyst ramps on a sector, the path from coverage to positions, and what good looks like at 12 months

Sourced from

Mergers & Inquisitions — Asset Management Interview Questions · Wall Street Oasis — Asset Management Interview Questions · Corporate Finance Institute — Asset Management + Stock Pitch · CFA Institute — Equity Investments + Portfolio Management curriculum · Aswath Damodaran (NYU Stern) — Valuation