Situational Awareness, the hedge fund founded by former OpenAI researcher Leopold Aschenbrenner, has divested the majority of its public stock holdings to Ken Griffin’s Citadel. This significant sale follows a period of substantial losses over the past month, as reported by the Wall Street Journal. The development marks a considerable setback for Aschenbrenner, a rising figure in the tech and finance worlds, who has been characterized as both “scarily smart” and “brash.”
Aschenbrenner, a 25-year-old German native, established the fund in 2024 despite lacking prior trading experience. He garnered widespread attention for his distinctive investment philosophy, articulated in essays that posited the exponential scaling of artificial intelligence would necessitate massive investments in semiconductors, compute power, memory, and energy infrastructure.
His professional journey includes joining OpenAI’s “superalignment” team in 2023, a move that came two years after he graduated as valedictorian from Columbia University at the age of 19, having enrolled at 15. However, his tenure at OpenAI concluded a year later due to what the company termed an improper disclosure of internal information. At that time, the superalignment team was under the leadership of OpenAI co-founder Ilya Sutskever and AI researcher Jan Leike. Following Aschenbrenner’s departure, Sutskever went on to launch his own venture, Leike joined competitor Anthropic, and Aschenbrenner subsequently founded Situational Awareness.
The fund initially experienced remarkable success. Through June of this year, Situational Awareness reported an impressive 439% return, according to the Financial Times. Assets under management reportedly surged to a peak of $45 billion before the fund’s positions began a sharp decline amidst a broader downturn in AI infrastructure investments, CNBC reported.
Despite mounting losses, Aschenbrenner maintained a resolute stance. In a letter to investors dated July 24, seen by the FT, he described the market selloff as one of the most compelling buying opportunities since early last year and extended an invitation for clients to commit fresh capital starting August 1. However, Bloomberg indicated that this appeal did not yield the desired level of new commitments.
Among the publicly traded stocks most severely impacted in the fund’s portfolio were memory chip manufacturers SK Hynix and SanDisk, clean energy developer Bloom Energy, and neocloud provider Nebius Group, all of which experienced declines exceeding 30% in the last month. The broader fall in AI infrastructure equities was driven by public investor concerns that substantial capital expenditures were not translating into immediate revenue. The fund's losses were exacerbated by its use of leverage, a common hedge fund practice involving borrowed money to amplify investment positions.
Following Citadel’s acquisition of the bulk of these holdings, Situational Awareness’ total assets have reportedly decreased to approximately $10 billion, as per Bloomberg, down from around $20 billion in recent months, according to an earlier Wall Street Journal report.
At its inception, Situational Awareness successfully raised several hundred million dollars. Notable early investors included quant-trading firm Jane Street, Stripe co-founders Patrick and John Collison, and Meta executives Daniel Gross and Nat Friedman.
Citadel’s latest acquisition aligns with its established operational pattern. Ken Griffin’s hedge fund is renowned for strategically stepping in to acquire attractive assets when highly leveraged market participants are compelled to unwind their positions. Notably, Citadel’s portfolio already included similar AI infrastructure investments even prior to this purchase, suggesting that Griffin, much like Aschenbrenner, anticipates a recovery in the sector and possesses the financial capacity to endure market fluctuations.
However, Situational Awareness has reportedly retained its investments in private companies. Most significantly, it continues to hold a stake in Anthropic, currently valued at $5 billion according to Bloomberg, which many market observers consider an appreciating asset. Anthropic was last valued at $965 billion in a Series H funding round in May and is projected to go public as early as October, potentially at an even higher valuation. A substantial windfall from the eventual sale of these private shares could conceivably offset some of the hedge fund’s public-market losses.
Other private investments within Situational Awareness’ portfolio include chipmaker MatX and AI data center startup Fluidstack, which was reportedly in discussions in April to secure a new funding round at an $18 billion valuation.
TechCrunch has reached out to Aschenbrenner for comment regarding these developments.
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