AI Hedge Fund’s 439% Run Ends in Citadel Fire Sale

AI Hedge Fund’s 439% Run Ends in Citadel Fire Sale
Situational Awareness was built to spot AI’s future before everyone else. Instead, after a violent reversal in AI-linked shares, the young hedge fund has been forced to hand most or all of its public-stock book to Ken Griffin’s Citadel.

Leopold Aschenbrenner, a former OpenAI researcher, launched the fund in 2024 around a sweeping thesis: the race to more powerful AI would fuel demand for chips, computing capacity, memory and energy. His unusually fast ascent attracted heavyweight backers including Jane Street, Stripe co-founders Patrick and John Collison, and Meta figures Daniel Gross and Nat Friedman.

The wager initially looked spectacular. The fund returned 439% through June and, at its peak, reportedly managed as much as $45 billion. But the same concentrated AI-infrastructure strategy became perilous as investors began questioning whether enormous capital spending would translate into revenue soon enough. Holdings including Nebius, Sandisk, Micron and CoreWeave each fell more than 35% in a month, according to one account.

By late July, Aschenbrenner was still urging investors to see the retreat as opportunity. In a letter reported by the Financial Times, he called it “one of the best buying opportunities since early last year.” The fund sought fresh capital, but the hoped-for commitments did not materialize, and leverage turned a market retreat into a forced unwind.

Axios reported that Citadel bought all of Situational Awareness’ public-equities portfolio, while other accounts described the sale as a majority or large portion of the book—an important distinction that does little to soften the scale of the retreat. Assets reportedly fell to roughly $10 billion after the transaction.

Critics saw a cautionary tale in a first-time manager betting aggressively on a fashionable theme; one commentary called the fund’s name “Hubris, Inc.” Yet the fund has not abandoned AI altogether. It retained private holdings, most notably an Anthropic stake Bloomberg valued at $5 billion, leaving Aschenbrenner with a potentially valuable—if far less liquid—second act.

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