AI hedge fund Situational Awareness sells public portfolio to Citadel after $35 billion rout
Leopold Aschenbrenner's Situational Awareness, once worth $45 billion, sold the bulk of its public equities to Ken Griffin's Citadel after an AI stock rout wiped out most of its value, leaving the fund with about $10 billion in remaining assets.
The meteoric rise
Leopold Aschenbrenner, a 25-year-old former OpenAI researcher, launched Situational Awareness in 2024 with no prior trading experience. The fund bet heavily on AI infrastructure, riding a wave of enthusiasm for semiconductors, memory, and energy. By the end of 2025, it had returned 2,000%, and assets under management swelled to $45 billion by early July 2026. Early backers included Stripe co-founders Patrick and John Collison, former GitHub CEO Nat Friedman, and ex-Apple employee Daniel Gross. Aschenbrenner's investment thesis, laid out in a series of essays, argued that scaling AI would require massive build-out of compute and energy.
We are building machines that can think and reason. By 2025/26, these machines will outpace many college graduates. By the end of the decade, they will be smarter than you or I; we will have superintelligence, in the true sense of the word.
The AI rout and margin calls
In July, AI stocks fell sharply as investors questioned whether huge capital expenditures would translate into near-term revenue. Situational Awareness's largest holdings (Nebius Group, SanDisk, Micron, and CoreWeave) each dropped more than 35% over the month. The fund also held short positions against software companies like Adobe, which rose over 30%, compounding losses. Leverage amplified the damage, and the fund faced margin calls that forced it to liquidate positions. On July 24, Aschenbrenner wrote to investors calling the selloff a buying opportunity and inviting fresh capital, but the appeal failed to attract enough commitments.
- Situational Awareness hedge fund launched by Leopold Aschenbrenner.
- Fund returns 2,000% for the year.
- Assets under management peak at $45 billion; year-to-date return reaches 439%.
- AI stock rout; fund's largest holdings fall more than 35%.
- Aschenbrenner writes to investors calling the selloff a buying opportunity.
- Citadel buys bulk of public portfolio; AUM falls to $10 billion.
Citadel steps in
With pressure mounting, Situational Awareness sold the bulk of its public stock portfolio to Ken Griffin's Citadel, a $71 billion hedge fund. Prime brokers including Goldman Sachs, JPMorgan Chase, Bank of America, and Citigroup facilitated the transaction. Citadel acquired the portion of the portfolio financed by broker leverage. The sale was completed on July 30, and the fund's assets under management collapsed from $45 billion to roughly $10 billion. The loss, estimated at $35 billion, is more than three times the $8 billion blow-up of Archegos Capital Management in 2021.
What remains
After the sale, Situational Awareness still holds a book of about $10 billion, consisting of remaining stocks and private investments. Notably, the fund has not sold its stake in Anthropic, the AI company expected to go public later this year. Aschenbrenner is engaged to Avital Balwit, chief of staff to Anthropic's CEO, adding a personal dimension to the holding. The fund's staff of eight, including four investment professionals, now manages a drastically smaller portfolio.
- 2025
- 2000 %
- 2026 (through June)
- 439 %
Aschenbrenner's trajectory
Aschenbrenner, a German-born prodigy, graduated as valedictorian from Columbia University at 19 after enrolling at 15. He joined OpenAI's superalignment team in 2023 but was dismissed a year later over an alleged leak of internal information, which he disputes. He then launched his hedge fund, attracting a cult following with his prescient AI bets. The fund's name, Situational Awareness, comes from his 135-page manifesto on machine intelligence. Despite the recent collapse, his remaining private holdings and ties to Anthropic may cushion the blow.
