AI Stock Guru’s Waterloo: His flagship fund plunged 67% in a single month, forcing him to offload assets at a loss to Citadel.

According to a Wall Street Journal report citing people familiar with the matter, Situational Awareness, the hedge fund founded by former OpenAI researcher Leopold Aschenbrenner, suffered major losses during the sharp downturn in AI stocks in July, with its net value dropping roughly 67% that month. The fund had previously held heavy positions in AI-related equities. As those holdings plummeted, it was forced to sell most of its stock positions to raise cash and meet margin calls from lenders; a significant portion of these positions was acquired by Ken Griffin’s Citadel. In a letter to investors, Aschenbrenner stated, “This month we let you down.” He attributed some of the losses to short sellers exacerbating sell-offs, noting the fund faced pressure similar to a “bank run.” Still, Situational Awareness had posted massive gains earlier this year: by the end of May, its returns had hit 270%. Even after July’s plunge, it remains up around 80% year-to-date. The report adds that since its launch roughly two years ago, the fund once managed over $20 billion in assets. Aschenbrenner had no prior professional investment experience, but his research and influence in the AI sector led some investors to view him as a leading figure in AI investing. The fund still holds stakes in private AI companies including Anthropic.