Citadel posts strongest July performance in years after buying distressed Situational Awareness assets

Citadel's multistrategy Wellington fund returned 5.9% in July, its strongest monthly gain since 2022, taking the fund’s year-to-date return to 12%, according to a source familiar with the firm’s performance. The firm’s tactical trading fund posted an 11.1% rise for the month, while its equities fund advanced 14.2%, both marking their best monthly results on record. The source, who asked to remain anonymous, said the gains were boosted by Citadel’s purchase of most of the public-stock portfolio previously held by the hedge fund Situational Awareness.

Citadel acquired the assets late in the month at a significant discount after Situational Awareness faced margin calls and was forced to liquidate positions following steep losses on artificial-intelligence trades. The distressed-sale purchase positioned Citadel to benefit from the market rebound that followed.

Situational Awareness, founded by former OpenAI researcher Leopold Aschenbrenner, had built large positions in AI-infrastructure companies while shorting software stocks. A reversal in those bets led to the fund’s rapid unwind and forced liquidation. Several prime brokers helped reduce the fund’s exposure, and Citadel emerged as one of the largest buyers of the remaining holdings.

Stocks that had been held by Aschenbrenner’s fund, including Nebius and Micron, recovered in the final days of July as broader market sentiment improved. Citadel, which managed about $71 billion in assets at the start of July, has a history of deploying capital during periods of market dislocation. The firm declined to comment on the performance figures.