AI-focused hedge fund Situational Awareness imploded in July. Assets plummeted from a peak of $45 billion to roughly $10 billion. Former OpenAI researcher Leopold Aschenbrenner, 25, launched the fund in 2024. The fund recorded returns exceeding 1,000% before the collapse. July losses reached as high as 77% following a sharp downturn in AI-related equities.
Concentrated bets on AI infrastructure firms like Micron, SanDisk, and CoreWeave drove the decline. The fund utilized leverage of up to four times its capital to amplify positions. This high leverage triggered margin calls from lenders including Goldman Sachs and Bank of America.
Aschenbrenner sold the majority of the public stock portfolio to Ken Griffin’s Citadel to stabilize operations. The fund retained its private equity holdings. These assets include a significant stake in the AI company Anthropic.