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AI losses force Situational Awareness hedge fund to liquidate public-stock holdings; Citadel takes over positions

2026-07-31·newswire-us-stock-082011
AI losses force Situational Awareness hedge fund to liquidate public-stock holdings; Citadel takes over positions.

Situational Awareness, a U.S. hedge fund founded by former OpenAI researcher Leopold Aschenbrenner, has been forced to liquidate all of its publicly traded stock holdings after suffering severe losses on investments tied to the artificial-intelligence industry. Citadel has reached an agreement with the fund to take over those stock positions.

People familiar with the matter said Situational Awareness managed as much as $45 billion in assets in early July. Over the past several weeks, steep declines in several heavily held AI-infrastructure companies, combined with short positions in software companies moving against the fund, caused massive losses and triggered margin calls from major brokers.

To raise cash and close positions, several major brokers urgently helped the fund sell its long and short positions in the market. The source text does not identify one broker in a damaged passage. Relevant data and documents show that the fund's main long positions were concentrated in SK Hynix, Micron, Sandisk and CoreWeave.

Each of those stocks had fallen more than 35% this month. Meanwhile, shares of software companies including Adobe, which the fund had shorted, rose against the market, further intensifying pressure on its liquidity.

A spokesperson for Situational Awareness expressly denied earlier market rumors that the fund planned to sell its stake in startup Anthropic, saying the reports were inaccurate. Aschenbrenner, 25, previously worked on OpenAI's Superalignment team.

After leaving the company in 2024, he attracted attention by writing about the expansion of artificial-intelligence computing power, chip and energy infrastructure, and later founded Situational Awareness.

The large-scale forced liquidation marks the most serious operating crisis since the fund's founding for a hedge fund built around highly leveraged AI-themed investments.

#Stocks #AI #Semiconductors

Full text

AI losses force Situational Awareness hedge fund to liquidate public-stock holdings; Citadel takes over positions

Situational Awareness, a U.S. hedge fund founded by former OpenAI researcher Leopold Aschenbrenner, has been forced to liquidate all of its publicly traded stock holdings after suffering severe losses on investments tied to the artificial-intelligence industry. Citadel has reached an agreement with the fund to take over those stock positions. People familiar with the matter said Situational Awareness managed as much as $45 billion in assets in early July. Over the past several weeks, steep declines in several heavily held AI-infrastructure companies, combined with short positions in software companies moving against the fund, caused massive losses and triggered margin calls from major brokers. To raise cash and close positions, several major brokers urgently helped the fund sell its long and short positions in the market. The source text does not identify one broker in a damaged passage. Relevant data and documents show that the fund's main long positions were concentrated in SK Hynix, Micron, Sandisk and CoreWeave. Each of those stocks had fallen more than 35% this month. Meanwhile, shares of software companies including Adobe, which the fund had shorted, rose against the market, further intensifying pressure on its liquidity. A spokesperson for Situational Awareness expressly denied earlier market rumors that the fund planned to sell its stake in startup Anthropic, saying the reports were inaccurate. Aschenbrenner, 25, previously worked on OpenAI's Superalignment team. After leaving the company in 2024, he attracted attention by writing about the expansion of artificial-intelligence computing power, chip and energy infrastructure, and later founded Situational Awareness. The large-scale forced liquidation marks the most serious operating crisis since the fund's founding for a hedge fund built around highly leveraged AI-themed investments.

Situational Awareness, a U.S. hedge fund founded by former OpenAI researcher Leopold Aschenbrenner, has been forced to liquidate all of its publicly traded stock holdings after suffering severe losses on investments tied to the artificial-intelligence industry. Citadel has reached an agreement with the fund to take over those stock positions.

People familiar with the matter said Situational Awareness managed as much as $45 billion in assets in early July. Over the past several weeks, steep declines in several heavily held AI-infrastructure companies, combined with short positions in software companies moving against the fund, caused massive losses and triggered margin calls from major brokers. To raise cash and close positions, several major brokers urgently helped the fund sell its long and short positions in the market. The source text does not identify one broker in a damaged passage.

Relevant data and documents show that the fund's main long positions were concentrated in SK Hynix, Micron, Sandisk and CoreWeave. Each of those stocks had fallen more than 35% this month. Meanwhile, shares of software companies including Adobe, which the fund had shorted, rose against the market, further intensifying pressure on its liquidity.

A spokesperson for Situational Awareness expressly denied earlier market rumors that the fund planned to sell its stake in startup Anthropic, saying the reports were inaccurate.

Aschenbrenner, 25, previously worked on OpenAI's Superalignment team. After leaving the company in 2024, he attracted attention by writing about the expansion of artificial-intelligence computing power, chip and energy infrastructure, and later founded Situational Awareness. The large-scale forced liquidation marks the most serious operating crisis since the fund's founding for a hedge fund built around highly leveraged AI-themed investments.

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