Leopold Aschenbrenner built his reputation on a simple thesis: artificial intelligence would reshape the world, and the smart money should be positioned accordingly. In July 2026, the world reshaping went in the wrong direction. His hedge fund, Situational Awareness, lost approximately 67% of its value in a single month.
The liquidation and Citadel’s opportunism
After the staggering decline, Aschenbrenner’s fund liquidated its entire public equities portfolio. The buyer was Ken Griffin’s Citadel, which scooped up the positions in a block trade.
In an investor letter, Aschenbrenner was blunt about the damage. “We let you down this month,” he wrote.
The losses were concentrated in AI infrastructure and semiconductor stocks, the very sectors Aschenbrenner had built his investment thesis around.
The Anthropic deal that didn’t happen
Making matters worse, Situational Awareness had been in the process of arranging a $3.5 billion sale of shares in Anthropic, the AI safety company that competes with OpenAI. The firm pulled out of that deal amid a liquidity crisis.
From OpenAI researcher to hedge fund cautionary tale
Aschenbrenner previously worked as a researcher at OpenAI, where he developed a deep conviction about AI’s transformative potential. That conviction eventually manifested as an AI-focused manifesto that gained significant attention in both tech and finance circles. He launched Situational Awareness as a vehicle to put real money behind his beliefs, taking concentrated positions in AI infrastructure plays.
Aschenbrenner has vowed to continue operating the fund, framing the loss as a setback rather than a finale.
What this means for AI investors
Investors in thematic funds, particularly those concentrated in AI, should be asking their managers pointed questions about position sizing, hedging strategies, and liquidity management. A 67% monthly drawdown suggests that risk controls either weren’t in place or weren’t sufficient to handle the magnitude of the move.
The abandoned Anthropic sale adds another layer of concern. Private market holdings are inherently illiquid, and when a fund needs cash in a hurry, those positions become dead weight on the balance sheet. Any fund holding significant private AI stakes alongside levered public positions is running a version of the same playbook that just imploded at Situational Awareness.