# Citadel Acquires Bulk of Leopold Aschenbrenner's AI Stock Portfolio Following Brutal Hedge Fund Sell-Off > Source: > Published: 2026-07-31 14:42:54+00:00 # Citadel Acquires Bulk of Leopold Aschenbrenner's AI Stock Portfolio Following Brutal Hedge Fund Sell-Off ## Ken Griffin's Citadel capitalises on AI stock downturn, acquiring major assets from Situational Awareness. The AI investment boom has produced extraordinary winners, but its latest casualty shows just how quickly fortunes can reverse when leverage collides with a collapsing market. Ken Griffin's Citadel has emerged as the buyer of most of Situational Awareness' public equity portfolio after the hedge fund suffered steep losses during July's sharp AI stock downturn. The transaction marks one of the biggest hedge fund portfolio restructurings linked to the recent sell-off in artificial intelligence equities. It also underscores how rapidly sentiment has shifted after more than two years of relentless enthusiasm surrounding AI-focused investments. ## Rapid Rise Meets a Painful Reality Situational Awareness, founded by former OpenAI researcher [Leopold Aschenbrenner](https://www.ibtimes.co.uk/leopold-aschenbrenner-ai-hedge-fund-setback-1811737) in 2024, built its reputation on aggressive bets across the artificial intelligence ecosystem. Investors flocked to the fund after it delivered an eye-catching 439% return between the beginning of the year and the end of June, making Aschenbrenner one of Wall Street's most closely watched AI investors. According to people familiar with the matter, the hedge fund sold most of its publicly traded stock portfolio to Citadel after suffering heavy losses as AI shares tumbled throughout July. The fund reportedly came under pressure to either raise additional capital from investors or reduce its exposure by selling assets. It ultimately opted to dispose of the bulk of its listed holdings. The portfolio included several of the market's best-known AI beneficiaries, including Broadcom, Intel and CoreWeave, companies that have all experienced heightened volatility as investors reassessed lofty valuations across the sector. While the sale significantly reduces Situational's public market exposure, sources said the firm will continue managing a portfolio worth roughly $10 billion consisting of listed securities and private investments. That includes its stake in AI start-up Anthropic, which remains untouched. ## Citadel Seizes an Opportunity For Citadel, the acquisition reflects the advantage held by well-capitalised hedge funds during periods of market stress. Sources said that Griffin's firm acquired the portion of Situational's portfolio financed through borrowed money provided by prime brokers. The deal was facilitated by several of Wall Street's largest financial institutions, including Goldman Sachs, JPMorgan Chase, Bank of America and Citigroup. With approximately $71 billion in assets under management, Citadel has repeatedly demonstrated its ability to deploy capital when competitors are forced into defensive positions. Buying quality assets during distressed market conditions has long been a hallmark of large multi-strategy hedge funds with deep liquidity. Neither Citadel nor Situational publicly commented on the transaction. ## AI Trade Faces Its Toughest Test Yet The deal arrives against mounting pressure across the hedge fund industry as artificial intelligence investments undergo their sharpest correction since the sector's explosive rally began. Data from Goldman Sachs showed Asia-focused long-short hedge funds had lost an average of 18.6% during July through 28 July as investors rapidly reduced exposure to technology shares. Morgan Stanley separately reported that hedge funds have been aggressively unwinding AI-related positions, selling long holdings while simultaneously covering bearish trades. Many hedge funds borrow heavily from prime brokers to increase market exposure and magnify returns during favourable conditions. The strategy works well when asset prices rise, but falling markets can quickly trigger margin pressures that force funds to liquidate positions. Those sales often intensify declines, creating a cycle that pushes prices lower and prompts further selling across the market. It remains unclear whether Situational itself faced margin calls before agreeing to the sale. ## Pressure Builds Across the AI Investment Landscape Situational previously managed around $20 billion in assets with a workforce of roughly 20 employees. Despite its relatively small size, the firm attracted backing from several influential technology and finance figures, including Jane Street, Stripe co-founders Patrick and John Collison, and Meta executives Daniel Gross and Nat Friedman. *The Wall Street Journal* reported that the fund had fallen approximately 67% during July after the collapse in AI-related stocks. According to that report, Aschenbrenner told investors that short sellers targeting the firm's largest positions had intensified the losses. © Copyright IBTimes 2025. All rights reserved.