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People can't stop talking about the situation at [Situational Awareness](https://www.businessinsider.com/situational-awareness-keeps-anthropic-stake-portfolio-sale-citadel-2026-7).
After a meteoric rise, Leopold Aschenbrenner's AI-focused hedge fund, Situational Awareness, was forced to sell most of its publicly traded stock portfolio to Citadel following steep losses on AI-related positions in recent weeks. The fund held onto its private investments, including its stake in Anthropic.
The meltdown of Situational Awareness, once sized at $20 billion, set off a wave of reactions and debate over what it said about investing in the AI space and about Aschenbrenner, a former OpenAI researcher who wrote a famous 165-page essay in 2024 about the future of AI.
Here's what smart people in tech and investing are saying about the situation.
Michael Dempsey, managing partner at Compound #
Michael Dempsey, managing partner at the New York-based investment firm Compound, said in a long post on X that Situational Awareness's "prescience was incredibly impressive and likely should still be funded and respected."
"That said, anyone who has experience in public markets could somewhat easily see this was One Big Trade and so probably there should have been way better views on risk besides buying index-level puts," he added, outlining several ways he thought the hedge fund may have mismanaged its risk.
"We shouldn't grave dance but should instead internalize some of the learnings here and appreciate someone who basically called their shot and executed on it but (thus far) didn't land the plane."
Shay Boloor, chief market strategist at Futurum Equities #
Shay Boloor, chief market strategist at Futurum Equities and commentator on business networks, said this was "the story of 2026."
"Ken Griffin's Citadel was pushing surprise-rate-hike fears just days before the AI trade collapsed and forced 4x-levered Leopold Aschenbrenner's Situational Awareness to unload its book near the lows. Citadel then reportedly bought most of those assets at significantly lower prices knowing that if sentiment deteriorated enough the fund could be forced to sell which makes the entire sequence look absolutely ruthless," he wrote on X.
"This is why the stock market is the greatest game on Earth."
Martin Shkreli, investor #
Martin Shkreli, an investor and former pharmaceutical executive convicted of fraud, appeared on the daily technology show TPBN on Thursday and discussed what led up to Situational Awareness's meltdown. He said it demonstrated how Wall Street works.
"It's the saddest, most Machiavellian thing. But he sort of had to blow up. There's no other ending. Because of the leverage level," he said.
He also said he thinks Aschenbrenner is "brilliant" and could still have a future in investing despite this being an "extremely humbling moment."
"He'll be back and successful," he said.
Tim Culpan, former Bloomberg columnist #
Tim Culpan, a former Bloomberg columnist, said the "meltdown" at Situational Awareness "shows the difference between intelligence and wisdom."
"Even if his investment thesis is spot on in the long-term, leveraged positions remove wiggle room to ride out the massive sell offs that inevitably occur in a hot market," he wrote in LinkedIn.