Citadel Buys Situational Awareness’s Stock Portfolio After Big Losses in AI

The highflying hedge fund run by Leopold Aschenbrenner is in crisis mode after AI-related bets sank

Situational Awareness, the once-highflying AI-focused hedge fund, sold the bulk of its stock portfolio to Ken Griffin’s investment firm Citadel after suffering deep losses, according to people familiar with the matter.

It marks a sudden downfall for Situational, led by former OpenAI employee Leopold Aschenbrenner. It had amassed well over $20 billion in assets under management since its founding just around two years ago, making it one of the fastest-growing firms in years. Aschenbrenner, who is in his mid-20s, was seen by some as an AI oracle, with other investors closely tracking his firm’s movements as it placed big, leveraged bets.

As investors shed positions in artificial-intelligence related stocks, Situational was under pressure to raise cash, either through sales of holdings or new capital commitments, to meet margin-call demands from its lenders, some of the people familiar with the matter said.

Its public investments include companies in the AI supply chain such as memory-chip makers SK Hynix and Sandisk, fuel-cell maker Bloom Energy and AI cloud-computing provider Nebius Group. Shares in all of those companies had plummeted over the past month as investors soured on AI and technology stocks amid worries about massive capital expenditures and higher borrowing costs.

Shares of companies in Situational’s portfolio rose Thursday after news of Situational’s stock sales surfaced.

Situational had borrowed money from banks to amplify its bets on stocks. Citadel only purchased the portion of the firm’s public-stock portfolio that was financed with borrowed money, while the firm held onto the remainder that it...

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> Situational had borrowed money from banks to amplify its bets on stocks. <

Hard to believe that a bank would loan money on such a risky investment. But I guess banks aren’t as conservative as I remember.

I remember a guest on Wall Street Week who ran a portfolio concentrating on only DJ stocks who said his mother had equaled or beat him for years with her strategy of buying and holding ATT stock whenever it yielded 5% or more.

Great comment. But rebound?

A child. RobinHood gamer type strategist. Even the panic sell and reversal is unwise. Denounce yourself!

Internet infamy is forever — his poor stewardship will taint his career (Other
People trusting him with their Money) for life. Reportedly using 3x margin for AI SWAG ( Stuff We All Get). The Random Walk down Wall Street cleans out guys like that.

He also thought the slump in enterprise software was forever so he was long datcenter and short enterprise SW. So at least he was diversified!

The AOC of hedge fund operators.

Not showing talent or luck.

and this:

“under pressure to raise cash ... through ... new capital commitments”

sounds a lot like a Ponzi Scheme ...

at any rate looks like the AI-bust is happening MUCH faster than predicted ...

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