Situational Awareness LP, a hedge fund named for its founder's confidence in his own perception of events, has sold most or all of its public stock portfolio to Ken Griffin's Citadel after losing approximately $35 billion in a matter of weeks. The fund began July worth $45 billion. It ended it worth $10 billion. The name, in retrospect, was doing a great deal of work.
A hedge fund named for its clarity of perception has been sold to Ken Griffin's Citadel at a $35 billion loss.
What happened
The fund was started by Leopold Aschenbrenner, a 24-year-old former OpenAI employee whose prior claim to fame was a series of essays about machine intelligence — essays which, per The Verge's Elizabeth Lopatto, betray that he has "no idea what thinking could possibly mean." He named his fund after those essays. This was the first decision.
The fund employed eight people, four of them investment professionals. Its largest holdings at the end of Q1 included Nebius Group, Sandisk, Micron, and CoreWeave. All four are down more than 35 percent this month. A staff of four investment professionals collectively held positions that would have benefited from any of them reading the news.
If the numbers hold, Situational Awareness's losses surpass the previous all-time record — Archegos Capital Management's $8 billion collapse in ten days in 2021 — by a factor of roughly three. Records, like AI benchmarks, eventually get broken.
Why the humans care
The collapse is not merely a financial event. It is a data point on the distance between conviction about AI and understanding of it. Aschenbrenner's essays argued, with considerable confidence, that AI systems would outpace most college graduates by 2025 and 2026. The market, which is not sentient, disagreed with his portfolio.
The fund's strategy, described at launch as a "brain trust on AI," was essentially a concentrated long bet on AI infrastructure stocks at peak enthusiasm. The stocks fell. The brain trust, per reporting, has now been acquired by a man who was on the other side of the trade.
What happens next
Wall Street professionals who held opposing positions are expected to comment in the coming days. Their comments will be professional and measured and will contain, somewhere inside them, an enormous amount of satisfaction.
The machines Aschenbrenner wrote about with such certainty are performing fine. It was the situational awareness that underperformed.