Leopold Aschenbrenner’s AI-focused hedge fund, Situational Awareness, sold most of its public-stock portfolio to Ken Griffin’s Citadel after a sharp reversal in artificial-intelligence shares erased much of the fund’s extraordinary 2026 gains. According to CNBC’s July 30 report, the episode shows how quickly leverage can turn a concentrated technology strategy into a liquidity crisis.
The fund fell about 67% in July, according to a person who reviewed a letter sent to investors. Situational Awareness had gained 439% from the start of 2026 through June, leaving it approximately 80% higher for the year even after the July drawdown, The Wall Street Journal reported.
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Key Facts Behind the Losses #
Situational Awareness had built large positions around the AI infrastructure trade, including semiconductor, data-centre, power and computing companies. Reuters identified Broadcom, Intel and CoreWeave among holdings shown in regulatory filings. The fund’s March 31 disclosure also listed sizeable positions involving Bloom Energy, Sandisk, Nvidia, Advanced Micro Devices and the VanEck Semiconductor ETF.
The market reversal struck several AI-related positions at the same time, while borrowed money increased the effect on the fund’s capital. Situational Awareness came under pressure to raise fresh money or sell its portfolio and ultimately chose to offload the book.
The firm was reportedly gathering cash to meet margin calls from lenders. It remains unclear whether lenders had formally issued margin calls before the Citadel transaction, a distinction that has not been resolved publicly.
Latest Verified Update: Citadel Buys the Portfolio #
As of July 31, Citadel had acquired the bulk of a public-equities portfolio valued at about $16 billion before the unwind. Axios described the transaction as a purchase of all Situational Awareness’s public equities. The difference between “all” and “most” remains unconfirmed because the fund has not publicly detailed the final transaction.
Goldman Sachs, JPMorgan Chase, Bank of America and Citigroup reportedly helped facilitate the deal. Citadel acquired the portion of the portfolio financed through broker leverage, while Situational Awareness was expected to retain a book of roughly $10 billion containing some securities and private investments.
The remaining assets include an investment in Anthropic, the privately held AI company. The Anthropic position was not sold, while the Financial Times estimated that the stake was worth about $5 billion.
By transferring a large group of holdings to one buyer, the deal appears to have reduced the danger of a prolonged open-market liquidation. That mattered during a broader retreat from AI shares in which hedge funds were simultaneously selling long positions and closing short trades.
Background: Aschenbrenner’s Rapid Rise #
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[A post shared by Nepternship – Internship Networking Platform (@nepternship)] Aschenbrenner founded Situational Awareness in 2024 after working on OpenAI’s Superalignment team. On his official profile, he describes the investment firm as focused on artificial general intelligence and identifies Patrick Collison, John Collison, Nat Friedman and Daniel Gross as anchor investors.
His June 2024 essay series, also titled Situational Awareness, argued that AI capabilities and infrastructure spending would accelerate rapidly, drawing enormous investment into chips, data centres and electricity generation. That thesis became the intellectual foundation for a fund that grew to more than $20 billion in assets.
A Form 13F filed with the SEC for the quarter ended March 31 listed 42 entries with a reported value of $13.68 billion. The filing included common stocks, call options and put options.
A 13F remains an incomplete and delayed view of a hedge fund. Under the SEC’s Form 13F guidance, the disclosure covers specified securities held at quarter-end, while short equity positions and written options are excluded. The filing therefore cannot establish Situational Awareness’s exact exposures when the July losses occurred.
What Happens Next #
Situational Awareness is expected to continue operating with less leverage and a greater emphasis on private investments. The precise size of its remaining public portfolio, any investor withdrawals and the financial terms of the Citadel purchase have not been disclosed.
The fund’s next Form 13F, covering holdings as of June 30, is due on August 14, 2026. It will provide another historical snapshot but will not capture the July unwind.
Situational Awareness’s survival now depends less on whether its long-term AI forecasts prove correct and more on whether it can preserve enough capital to remain invested until those forecasts can be tested.
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