Star AI hedge fund sells majority of its public profile to Citadel

 

It’s times like these when it’s very important to have a company name that doesn’t dunk on itself if something goes wrong. AI hedge fund Situational Awareness put out an emergency call to unload more than $10 billion from its public portfolio this week after absorbing massive losses. Billionaire Ken Griffin’s fund Citadel promised to buy a majority of the stock at a heavy discount yesterday.

Situational Awareness was founded two years ago by 25-year-old Leopold Aschenbrenner, a former OpenAI staffer who wrote the popular essay “Situational Awareness” in 2024 about how he expected AI to change everything. The fund invested huge amounts of leveraged cash in the software and hardware companies that it believed the AI revolution would depend on:

  • The hedge fund grew its portfolio to $45 billion in early July.
  • But recent investor jitters about the sustainability of the industry have cratered many of the fund’s biggest holdings, like Nebius, Micron, and Sandisk. (All three rebounded yesterday, but Aschenbrenner had already sold them 🫠.)

Looking ahead…Per some reports, Situational Awareness was also floating the sale of its stake in Anthropic, but the fund denied that. With the cash influx from Citadel, it’s possible that the fund is simply trying to keep its head above water until Anthropic’s expected IPO later this year. But the rest of Wall Street is on edge because large hedge funds crashing out have been early signs of crises.—MM

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