According to latest reports, Situational Awareness fund has completely sold all of its public stock holdings following significant losses on AI infrastructure investments and bad bets against software stocks. The fund, founded by former OpenAI researcher Leopold Aschenbrenner, grew to as large as $45 billion at the start of July before sustained losses forced the complete unwinding of its portfolio. Ken Griffin's Citadel hedge fund has reached a deal to purchase the fund's publicly traded assets, with Millennium Management and Jane Street reportedly declining to participate in the acquisition. As reported by the Wall Street Journal, the deal was first reported by the Wall Street Journal, with the fund retaining a portfolio valued at approximately $10 billion including private investments such as a stake in Anthropic, which has not been sold. The fund's 439% year-to-date return by June 2026 and 1,551% since inception before experiencing a sudden 67% decline in July after incurring heavy losses on AI stocks.
As reported by Bloomberg, the fund's cryptocurrency exposure grew significantly from zero to 25% of its total holdings over the past year. The latest 13F filing shows $1.38 billion in mining and data center holdings, with Core Scientific leading at $418.7 million, followed by IREN at $328.6 million and Applied Digital at $278 million. The mining portfolio includes Cipher Mining, Riot Platforms, Hut 8, WhiteFiber, Bitdeer, CleanSpark, and Bitfarms. This shift aligns with the fund's thesis that power infrastructure would become the bottleneck for artificial intelligence development.
The proximate cause of the fund's collapse was leverage, not the thesis itself. According to the Wall Street Journal, Aschenbrenner was running three to four times leverage on his positions — borrowing three to four dollars for every dollar of investor capital. This kind of gearing turned an ordinary sector pullback into a solvency event, and the fund was forced to meet margin calls from its lending banks as positions deteriorated through late July. The fund's roughly 4x leverage and margin calls specifically from top Wall Street banks led to the folding up of the fund. Several of the firm's prime brokers — including Bank of America, Goldman Sachs and JPMorgan Chase — have been working with the fund as it sought to meet margin requirements or reduce positions in an orderly fashion. The recent selling pressure in AI stocks led to exactly that situation, with the fund either having to raise fresh capital from investors or offload some of its book, eventually choosing the latter.
The fund's strategy was concentrated in one of the more crowded trades on Wall Street this year, building positions betting on companies expected to supply chips, data centers, and power for the AI buildout, while shorting software firms viewed as vulnerable to AI disruption. According to CNBC, the fund had built large long stakes in Nebius, Bloom Energy, SanDisk, CoreWeave, SharonAI and IREN as of the end of March. When memory and semiconductor names sold off sharply in July, both sides of the leveraged, concentrated book got hit simultaneously — the textbook setup for a forced unwind. The Nasdaq-100 fell 10% from its early June peak, compounding the fund's difficulties. The fund's largest holdings at the end of the first quarter included Nebius Group, Sandisk, Micron and CoreWeave, all of which are down more than 35% this month, as reported by people familiar with the matter. The Nasdaq 100 gave up around 10% from its late-June high, with Micron falling 39% from its record close of 25 June, as reported by Investing.com.
As reported by Bloomberg, Situational Awareness fund was founded by Leopold Aschenbrenner, who was hired by OpenAI for its Superalignment team in 2023 before being let go in April 2024. In his June 2024 essay series, Aschenbrenner predicted that AGI (artificial general intelligence) by 2027 would be strikingly plausible, arguing that the bottleneck would be physical infrastructure rather than chips. The essay became essential reading in AI circles and turned its 22-year-old author into a minor celebrity. Within weeks, that fame converted into $225 million in seed capital from backers including Stripe's Patrick and John Collison, former GitHub CEO Nat Friedman, and investor Daniel Gross. What followed was one of the more remarkable capital-raising runs in recent hedge-fund history: from $225 million to a reported peak of $45 billion — all built on the same AI-infrastructure thesis from the essay, now expressed as a leveraged, concentrated equity book. Aschenbrenner notably still owns the piece of his portfolio most likely to validate the original thesis, his Anthropic stake worth approximately $5 billion according to AI Supremacy newsletter estimates, which could grow substantially if the company eventually goes public.
