Situational Awareness loses 67% in July, sells $16B public portfolio to Citadel amid margin call chaos

The hedge fund that became synonymous with the AI trade just learned a brutal lesson about leverage. Situational Awareness, the fund run by 24-year-old former OpenAI researcher Leopold Aschenbrenner, lost roughly 67% of its value in July, forcing it to dump most of its public equity holdings to Citadel to meet margin calls from its prime brokers. The portfolio sold to Citadel was valued at approximately $16 billion. The buyer reportedly picked it up at a discount of around 10%. From 439% returns to margin calls Situational Awareness had ridden concentrated long positions in AI hardware and semiconductor names, including SK Hynix, Nebius, and Micron, to a staggering 439% return through June 2026. That performance catapulted the fund’s assets under management to a peak of roughly $45 billion by early July. For context, a fund managed by a team of about 12 people was overseeing more capital than most established multi-strategy firms accumulate over decades. Then July happened. A broader downturn in AI infrastructure stocks turned the fund’s leveraged bets against it with stunning speed. Bank of America, Goldman Sachs, and JPMorgan, the fund’s prime brokers, came knocking with margin c...