Few investors have risen as fast, or fallen as publicly, as Leopold Aschenbrenner, who turned a viral essay into a hedge fund built around his own thesis that artificial intelligence would drive a boom in chips, memory, data centres and power infrastructure.
Situational Awareness grew its assets from $225 million in 2024 to roughly $45bn by early July 2026, backed by long positions in names such as SK Hynix, CoreWeave, SanDisk and Micron, alongside short bets against software firms including Adobe, a strategy hat had delivered impressive gains until it didn’t.
The reversal
When AI infrastructure stocks faced heat in July this year, both sides of that book moved against the fund at once, with the longs falling hard while the short positions failed to provide the hedge they were intended to provide.
The portfolio’s value dropped by roughly 67% in a matter of weeks, a decline made far more dangerous by leverage reported at close to four times the fund’s capital.
The margin call
As losses mounted, prime brokers understood to include Goldman Sachs, JPMorgan, Bank of America and Citigroup issued margin calls the fund could not meet from cash alone, and although Aschenbrenner tried to raise fresh capital and held talks with other large funds about a rescue, neither route came together in time.
With the clock running out, the firm’s roughly $16bn public equities book was sold in a single block trade to Ken Griffin’s Citadel, which picked it up at a discount thought to be around 10%.
Citadel’s payoff
That timing proved lucrative for Citadel. The AI sector stabilised almost as soon as the forced seller had been removed from the market, and several of the names Situational Awareness had just handed over rebounded within 24 hours, helping Citadel to its best month in years.
Where it leaves Aschenbrenner
Assets at Situational Awareness now sit at around $10bn, down from that early July peak, made up of remaining holdings alongside private positions including a stake in Anthropic.
Even so, the fund is reportedly still up around 80% for the year, with the Anthropic stake’s gains largely offsetting the damage from the public book. Aschenbrenner struck a contrite note in a letter to investors, acknowledging simply that the fund had let them down that month.
According to the New York Post’s On The Money, several of Wall Street’s biggest banks, including JPMorgan, Goldman Sachs, Bank of America and Citigroup, have so far chosen to keep their prime brokerage relationships with the fund intact rather than cut ties, while Morgan Stanley is still said to be planning to onboard Situational Awareness in September.
For now, the decision by his prime brokers to stay put despite the losses is perhaps the clearest sign of where Aschenbrenner still stands with Wall Street. Wall Street banks have seen the damage to the fund first-hand, yet none of its biggest relationships appear to have been broken, suggesting that whatever concerns the selloff has raised, Aschenbrenner has not lost the confidence of the institutions that matter most to keeping Situational Awareness running.
