Citadel says it has shed over 80% of risk from Situational Awareness assets
Ken Griffin told clients that Citadel has unwound more than 80% of the risk tied to the hedge fund Situational Awareness after acquiring its public-stock holdings, and noted a strong July performance for its Wellington fund.
Citadel disclosed that it has reduced more than 80% of the risk associated with the portfolio it bought from the hedge fund Situational Awareness. In a letter to clients, CEO Ken Griffin said the firm completed over 100 block trades worth more than $4 billion to unwind the exposure.
Griffin said Citadel began talks to purchase the assets on July 29, and the transaction was finalized after Situational Awareness was forced to liquidate its public positions following steep losses. He credited the banks’ trading and prime-brokerage teams for facilitating the rapid transfer.
"A transaction of this magnitude could not have been completed without the extraordinary cooperation of the trading and prime brokerage teams at the banks serving both firms," Griffin wrote.
Griffin also reported that Citadel’s flagship Wellington multistrategy fund posted a 5.94% return in July, its best monthly gain since 2022.
Situational Awareness had concentrated long positions in artificial-intelligence-related stocks and short positions in software companies, a strategy that suffered heavy losses as AI-related shares fell sharply in June and July while software stocks recovered. The resulting margin calls led the fund to sell its holdings, creating the opportunity for Citadel’s purchase. Since the acquisition, AI-related stocks have begun to recover, according to the letter.