- Leopold Aschenbrenner's AI hedge fund, Situational Awareness, collapsed from $45 billion to around $10 billion in assets, after peaking earlier in the month, on falling semiconductor stocks and margin calls.
- Margin calls from Situational Awareness's prime brokers forced a distressed sale of its publicly traded holdings to Ken Griffin's Citadel.
- The fund lost on both bullish AI infrastructure bets and bearish wagers on software companies like Adobe.
- Before the sale to Citadel, about two-thirds of the fund's holdings were in public equities, and the rest were private stakes dominated by a multibillion-dollar Anthropic investment.
- Citadel acquired its leveraged stock positions, including SK Hynix and CoreWeave, at below-market prices.
- The 25-year-old Aschenbrenner built the fund around his AI-infrastructure thesis from a 2024 essay after leaving OpenAI; early backers included Stripe co-founders Patrick and John Collison, Nat Friedman, and Daniel Gross.
- Wall Street observers expected the blow-up, according to coaching firm founder Jerry Diao, who said: A lot of people saw this blow-up as a matter of not if, but when.
- The collapse comes as Aschenbrenner is scheduled to marry Avital Balwit, chief of staff for Anthropic CEO Dario Amodei, this weekend.
Citadel's acquisition of Situational Awareness's stock portfolio marks a significant event in the hedge fund landscape. The fund, led by 25-year-old Leopold Aschenbrenner, collapsed from $45 billion to $10 billion due to margin calls and losses in AI investments.1256
Prime brokers including Bank of America, Goldman Sachs, and JPMorgan Chase had been working with the fund to meet margin requirements before the sale. The fund's holdings, which included SK Hynix and CoreWeave, were sold at below-market prices, reflecting the distress of the situation.
Aschenbrenner's strategy relied heavily on bullish bets in AI infrastructure, but losses on these investments, coupled with bearish positions in software companies like Adobe, contributed to the fund's downfall.3
The fund had utilized as much as 400% leverage, which analysts noted was a risky strategy that ultimately led to its collapse.
Critics have pointed out Aschenbrenner's lack of experience in managing funds, with some suggesting he was more lucky than skilled. His early backers included notable figures like Patrick and John Collison of Stripe and former GitHub CEO Nat Friedman.
Aschenbrenner's collapse comes just as he is set to marry Avital Balwit, chief of staff for Anthropic CEO Dario Amodei, highlighting the personal stakes involved in this financial turmoil.48
“The fund slid from a $45 billion July peak to about $10 billion by Thursday, with SK Hynix and CoreWeave sold at a discount. "A lot of people saw this blow-up as a matter of not if, but when," said Jerry Diao, who runs a Wall Street coaching firm.”
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