BlockBeats news, on July 31, according to the Financial Times, Leopold Aschenbrenner, founder of the AI hedge fund Situational Awareness, stated in a letter to investors that the fund's assets shrank by 67% in July. He took "full responsibility" for the events leading to this loss and pledged to ensure the team learns from these "extremely costly scars."
Situational Awareness was founded in 2024 and, through an aggressive bet on the AI boom, once grew its assets to over $20 billion. This week, the sell-off in AI stocks severely impacted key holdings such as Bloom Energy and SanDisk. Aschenbrenner compared the fund’s situation to a “bank run,” stating that the market has been engaging in adverse trading of stocks publicly associated with the fund.
On Wednesday, the fund reached an emergency exit deal with Citadel, selling off a large portion of its public equity holdings at a discount; specific terms have not been disclosed. Aschenbrenner stated that the fund will continue operating and will not exit the public equity market, but it will no longer borrow from banks to leverage its positions. Despite significant losses in July, the fund is up 80% for the year.
Aschenbrenner said: “Our fund must always maintain a structure that can withstand a single loss and continue fighting.” The investor letter did not disclose the fund’s latest assets under management, and many early investors are subject to lock-up agreements that prevent redemptions until at least September.