AI Stock Guru Leopold: Fund Will Continue Operations, Will Not Exit Public Stock Markets, and Will Learn Lessons From Recent Losses

According to the Financial Times, Leopold Aschenbrenner, founder of AI hedge fund Situational Awareness, said in an investor letter that the fund’s assets shrank 67% in July. He took “full responsibility” for the loss and pledged to ensure the team learns from these “extremely costly scars”. Founded in 2024, Situational Awareness once grew to over $20 billion in assets thanks to aggressive bets on the AI boom. This week’s AI stock sell-off hit the fund’s major holdings, including Bloom Energy and SanDisk, hard. Aschenbrenner compared the fund’s situation to a “bank run”, noting that the market engaged in unfavorable trading of stocks linked to the fund. On Wednesday, the fund reached an emergency exit deal with Citadel, selling most of its public stock holdings at a discount; specific terms were not disclosed. Aschenbrenner said the fund will continue operating and will not exit public stock markets, but will no longer borrow from banks to leverage its bets. Despite the major July loss, the fund remains up 80% year-to-date. Aschenbrenner stated: “Our fund must always maintain a structure that can withstand a loss and keep fighting.” The investor letter did not disclose the fund’s latest assets under management; many early investors are subject to lock-up agreements and cannot redeem funds until at least September.