Aschenbrenner's Situational Awareness sells its public stock book to Citadel after AI-trade losses

Situational Awareness, the AI-focused hedge fund founded by former OpenAI researcher Leopold Aschenbrenner, has sold the bulk of its public stock portfolio to Ken Griffin's Citadel after steep losses. Prime brokers had scrambled to meet margin calls, and the public book — roughly two-thirds of the fund's assets — changed hands in one trade on 30 July 2026. The fund keeps its private holdings and will continue as a private investment firm.

The fund made one leveraged bet — that the AI build-out would keep lifting suppliers of chips, memory, and power, while software fell. Positions in Micron , SK Hynix , Sandisk , Nebius , and CoreWeave unravelled fast, and shorts on software names moved the wrong way, squeezing it from both sides.

Nebius, where the fund disclosed a multibillion-dollar stake in May 2026, has fallen about 48% from its peak, erasing roughly $35bn in market value. Sandisk is down 56% in barely a month. Leverage, reportedly run up to ~4x to magnify returns, amplified the losses just as fast.

The speed of the collapse follows an equally rapid rise. Aschenbrenner launched the fund in September 2024 with about $225m, backed by the Stripe founders, Nat Friedman , Daniel Gross , and trading firm Jane Street . It peaked at around $20–24bn in assets, up 439% in the first half of 2026, before the July sell-off. More than $10bn of stock changed hands in the Citadel block, facilitated by Goldman Sachs, JPMorgan, Bank of America and Citigroup.

Situational Awareness keeps its private holdings, the largest being a stake in Anthropic valued at about $5bn, which it has not sold. The firm runs on a lean team of around 20 and will operate primarily as a private investment firm going forward, while continuing to trade public equities on a smaller scale.

The man who wrote a defining case for the AI boom got margin-called out of it. His long-chips, short-software trade — the theme that has defined this year — was taken to an extreme with borrowed money, turning a bad month into a crisis. In a 24 July 2026 letter to investors, Aschenbrenner said the fund had "not been immune" to the sell-off, then called it one of the best buying windows since early 2025 and invited fresh capital from 1 August.

Late on 30 July 2026, Aschenbrenner sent a fresh letter to LPs reopening the fund to new capital — shared publicly by TBPN with the line "rumours of his demise are greatly exaggerated". Prominent investors signalled interest, with Elad Gil posting that he had asked to invest in the fund for the first time.