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Situational Awareness
Leopold Aschenbrenner's hedge fund, Situational Awareness, is unwinding many trades after suffering heavy losses on AI stocks like SK Hynix and a failed short bet against software firms such as Adobe, forcing prime brokers to scramble for cash to meet margin requirements, with Citadel reaching a deal to buy the fund's publicly traded assets. The fund, which grew to as large as $45 billion at the start of July, has seen its portfolio of AI infrastructure investments decline sharply while short positions in software companies moved against it, according to people familiar with the matter. Prime brokers including Bank of America, Goldman Sachs, and JPMorgan Chase have been working with the fund to meet margin calls or reduce positions in an orderly fashion, marketing both long and short holdings for sale before Thursday's trading. The fund's largest first-quarter holdings—Nebius Group, Sandisk, Micron, and CoreWeave—are all down more than 35% this month. The situation remains fluid, and it is unclear if the firm has satisfied its margin calls through sales. Aschenbrenner, a 25-year-old former OpenAI researcher, built the fund around the thesis that powerful AI systems require vast expansion of chips, memory, data centers, and electricity generation. He became prominent after publishing essays in 2024 on AI's computing needs, which became the fund's intellectual foundation after he left OpenAI. Aschenbrenner was fired from OpenAI in 2024 over an alleged improper disclosure of internal information, which he disputes. The exact size of the fund's losses and the amount it seeks to raise could not be determined.