Hedge fund Situational Awareness, led by Leopold Aschenbrenner, suffered a severe liquidity crisis after its aggressive bets on AI infrastructure stocks experienced a dramatic reversal in July. Despite previously boasting over 1,000% gains and $45 billion in assets, the fund’s top holdings like Sandisk and Micron Technology plummeted, forcing it to offload much of its portfolio to Ken Griffin’s Citadel at a discount, reducing its holdings to approximately $10 billion.
Leopold Aschenbrenner's hedge fund, Situational Awareness, made aggressive bets on artificial intelligence (AI) infrastructure stocks, only to see them become major market casualties in July. According to a 13F filing released on Friday, the fund's five largest disclosed U.S.-listed stock holdings at the end of June included Sandisk, Micron Technology, Bloom Energy, Taiwan Semiconductor Manufacturing, and Nebius Group. All these prominent AI-related companies were severely impacted the following month as the burgeoning AI trade abruptly reversed course.
This sudden downturn pushed Situational Awareness to the brink, ultimately forcing it to offload a significant portion of its public-equity portfolio to Ken Griffin's Citadel. Sandisk, the fund's largest U.S. position valued at $5.7 billion, saw a drastic plunge of nearly 47% in July. Micron Technology, closely trailing at $5.6 billion, tumbled by almost 29%. Bloom Energy slid 32%, Taiwan Semiconductor Manufacturing lost 15%, and Nebius Group slumped 31%. The regulatory filing highlighted Aschenbrenner's strategy of aggressively adding to several of these very stocks that would soon bear the brunt of the AI selloff. The fund also held $745 million in CoreWeave, another AI infrastructure firm caught in the July market rout.
Situational Awareness had built its investment strategy around one of Wall Street's most compelling themes: acquiring stakes in companies poised to supply the memory chips, data centers, power, and other vital infrastructure required for the AI revolution. Concurrently, it placed bets against software companies that Aschenbrenner believed were susceptible to disruption from AI itself. This strategy had been remarkably successful for much of the fund's brief history, generating over 1,000% gains since its inception, as reported by The Wall Street Journal in June. At its peak earlier this summer, the fund managed a substantial $45 billion in assets.
However, the rapid reversal in its major stock positions, exacerbated by losses on its short bets and significant leverage, quickly spiraled into a severe liquidity crunch. By July 30, the fund was compelled to sell its leveraged stock holdings—including heavily impacted names like SK Hynix and CoreWeave—to Ken Griffin's Citadel at a discount. This forced liquidation caused the fund's total holdings to shrink dramatically to approximately $10 billion. It's important to note that the 13F filing only provides a snapshot of U.S.-listed long positions held as of June 30 and, therefore, does not offer a complete overview of Situational Awareness's total exposures or the full extent of the trades that ultimately led to its substantial losses.
