Citadel Acquires Public Stock Portfolio of AI-Focused Hedge Fund Situational Awareness
Citadel bought a large portion of the public equities held by Leopold Aschenbrenner’s hedge fund after the fund suffered steep losses amid a broader sell-off in AI-related stocks.
Citadel, the investment firm founded by Ken Griffin, purchased a significant share of the public-stock portfolio of Situational Awareness, the hedge fund run by former OpenAI researcher Leopold Aschenbrenner. The transaction follows a sharp decline in the fund’s value during a recent market correction that hit AI-related equities.
Situational Awareness, which had posted a 439% return in the first half of the year, built its positions around companies expected to benefit from the AI boom, including memory-chip manufacturers, data-center operators and cloud-computing providers. The fund employed leverage to amplify its bets, a practice that can increase gains in rising markets but also magnifies losses when prices fall.
Analysts point to a cascade of margin calls in South Korean memory-chip stocks that began in June as a possible trigger for the broader AI sell-off. The forced selling pressured leveraged investors, including Situational Awareness, to unwind positions, prompting the sale of its public holdings to Citadel.
After the acquisition was disclosed, several AI-linked stocks previously held by the fund, such as Sandisk and Nebius, rose sharply as investors adjusted to the reduced selling pressure.
A spokesperson for Aschenbrenner did not immediately respond to requests for comment.