Situational Awareness down 67% in July in AI stock rout

Posted by pondsider 3 days ago

Comments

Comment by scrlk 3 days ago

Comment by vessenes 3 days ago

This is everywhere. For reference, former FTXer and OpenAIer raised $225m into a hedge fund structure, went long and short, and reportedly peaked at $40bn of value; leverage bit hard this week and they sold their entire-ish portfolio to Citadel at $10bn. (Which, I imagine was very likely aiming at this outcome in their trading in the last few weeks).

Not reported anywhere -- was additional money raised in to the fund, and what is the LP basis? The story might be: wunderkind 40x+ed his first hedge fund and sold it to Citadel, or it might be: wunderkind raised $20bn and turned it into $10bn fast trading against Citadel.

Inquiring minds want to know!

Comment by Diogenesian 2 days ago

I strongly suspect it's closer to the latter; CNBC says they had to sell rapidly to meet margin requirements and it couldn't be confirmed if they actually succeeded. Suggests there was a lot more than $250m in collateral on the line.

https://www.cnbc.com/2026/07/30/leopold-aschenbrenners-hedge...

Comment by reisse 2 days ago

Nah, if they reinvested realized profit they can still be in the green overall

Comment by tyre 2 days ago

You’re talking about the same fund.

They were open about their gains. It was the margin calls and illiquidity that got them, not going negative. Some of their assets, like Anthropic stock, isn’t worthless, it’s just illiquid.

Comment by andy_ppp 2 days ago

“isn’t worthless” is still to be decided IMO. Until you can sell it it defines worthless!

Comment by mrandish 2 days ago

WSJ earlier reported that SA had a deal Wednesday night to sell their Anthropic stake to Citadel for $10B in cash but on Thursday morning backed out and decided to instead sell public equitities in their portfolio at what was reported as "a more than 10% discount."

Comment by victorbjorklund 2 days ago

You can sell it on secondary market? I’m sure many investors are bound up but there are transactions there.

Comment by swyx 1 day ago

some people should be too dumb to be allowed to comment on anything

Comment by mrandish 2 days ago

Per another WSJ article: https://www.wsj.com/finance/leopold-aschenbrenner-situationa...

"The fund had gained about 270% after fees this year through May. At that point, it was up more than 1,000% after fees since inception. It had ballooned to well over $20 billion under management, reaching the size of other well-known hedge funds that took decades to build."

So, down 67% in July but that was after already being up more than 1000% from the beginning up through May.

https://www.marketwatch.com/story/pioneering-ai-hedge-fund-w...

> "Research boutique Citrini posted some commentary on the potential developments at Situational Awareness on X Thursday. The post sought to downplay the gravity of the situation and opined that investors are likely to give Aschenbrenner the benefit of the doubt. “To put that into perspective, if you invested $100M with SALP at inception and wiped out ninety percent in July, your investment would be worth $230M,” said Citrini."

Comment by animal_spirits 2 days ago

If you owe someone 10 thousand dollars that’s a big problem for you. If you owe someone 10 billion dollars that’s a big problem for them

Comment by anon48293 2 days ago

That depends entirely on the value of your assets

Comment by EvgeniyZh 1 day ago

He claims 80% ytd profits, and there are speculations that Citadel got their whole public portfolio, so the remaining 10-15b are all private (and marked in unknown way) including ~5b in Anthropic, those who invested early in the year probably still in green (assuming there is liquidity for other private investments, which probably there is given it's AI stuff)

Comment by 2 days ago

Comment by changoplatanero 3 days ago

Say more about how citadel made this happen with their trading?

Comment by infecto 3 days ago

Firms like citadel will run crowding analytics, who owns what, at what leverage and rough margin trigger points. Over simplifying but they could be shorting the longs and going long on the shorts. Everyone generally knew situational was heavily levered.

Comment by vessenes 3 days ago

To be clear, I'm not claiming Citadel created double digit drops in SK Hynix / Samsung. I am saying that as market vol hits, vol traders might choose to make it worse. And when word hits the street someone has a liquidity position, prop traders WILL come and pressure. SA's filings were clear how concentrated they were, and this was known. In this case, Citadel (hedge fund) bought, while I imagine Citadel Securities would have been doing this (speculated upon) trading. We'll know more when the filings come out though. I'll be curious what of the portfolio they kept and what they worked / rolled in the market

Comment by Ekaros 2 days ago

It really sounds like market manipulation... But oh well it is the biggest boys doing it so it can't be that illegal... Free markets and everything for them right?

Comment by quickthrowman 2 days ago

Situational Awareness filed a 13F that lists a hedge fund’s long and short positions with the SEC. It’s public information, forcing an overleveraged fund to liquidate by pressuring the instruments they’re exposed to is not market manipulation, leverage cuts both ways and all of the people/institutions involved are professional/sophisticated investors

Here are all the SEC filings from Situational Awareness courtesy of SEC’s EDGAR: https://www.sec.gov/edgar/browse/?CIK=0002045724

Comment by BoorishBears 2 days ago

There's something amusingly circular about these conversations, because clearly laypeople like me and the person you responding to are saying "that sounds like it shouldn't be allowed" and the invariable responses are always "it is allowed!"

The comment literally says it: "it can't be that illegal"

Comment by victorbjorklund 2 days ago

Short squeezing is legal. No need to protect short sellers from the market.

Comment by bad_haircut72 2 days ago

Im not a trader but my understanding was that some traders at Citadel heard a rumor these guys were exposed, which gave Citadel an advantage because they knew they would have to liquidate? That doesnt sound like market manipulation to me, just trading with all the information you have

Comment by tomp 2 days ago

You make it sound like a conspiracy theory but it's just rational behaviour.

Large amount of leverage / shorting / concentrated bets in a single stock => increase probability of large swings in that stock's price => bigger risk of sudden market moves => bigger risk to market makers => market makers limit their exposure.

Comment by mrandish 2 days ago

Per a different WSJ article: https://www.wsj.com/finance/leopold-aschenbrenner-situationa...

> "Over the past week, traders at major hedge funds and other firms began sharing information about Situational’s exposure, with some placing short bets against its top holdings, hoping to profit as Aschenbrenner sold his positions to raise cash, according to two people close to the situation.

The short bets by the rivals weighed on Situational’s portfolio. Meanwhile, tech shares like SK Hynix were sliding. Over the three trading days ending Tuesday of this week, hedge funds reduced their positions at a scale not seen in three years, according to Goldman Sachs."

Having created (or at least amplified), the short squeeze on SA's position "Citadel executives reached out to Aschenbrenner, saying that the firm could be helpful if he needed ways to raise cash."

> "Aschenbrenner partially blamed short sellers who targeted the firm’s positions for exacerbating the fund’s losses"

Comment by jvsg_ 3 days ago

Citadel spread the rumor that the Fed was going to hike rates this week. This led to Situational Awareness getting margin called on their longs.

Comment by moralestapia 3 days ago

Quite similar to CZ and FTX.

Comment by energy123 3 days ago

That's a meme conspiracy theory on twitter that nobody in the industry takes seriously.

Comment by jvsg_ 2 days ago

Please educate me what exactly is the conspiracy theory here. Are you saying it is beneath Citadel to play this trick?

Comment by energy123 2 days ago

The cause and effect don't make sense because Citadel putting out such an opinion moves the entire market by only a few basis points which barely impacts what you're saying they're trying to impact. It's one of those narratives that sounds good because it's "Citadel" in both cases, which makes it go viral on social media among people who don't know what they're talking about, but it isn't coherent.

Comment by moralestapia 3 days ago

Wow, so, he narrowly avoided prison while at FTX, then went to work for Scam Altman, now does "investment funds" (a classic trope).

The guy really really really wants to end up in prison, lol.

Comment by mrandish 2 days ago

> he narrowly avoided prison while at FTX

Apparently, he worked in charitable giving at FTX and had nothing to do with the shady investments. He was never charged and there's no sign he was even investigated. Beyond SBF, only a handful of people were in on the scam and charged.

Comment by cmiles8 3 days ago

An inexperienced portfolio manager that’s never seen a down tech market in his life has created a massively leveraged position on frothy assets in a bubble and the bubble is looking ill. What could possibly go wrong.

Many of these AI plays are massively entangled and leveraged. It all looks good until it doesn’t and when there’s a hiccup things unravel quickly and exponentially. I fully expect in the next 12 months we’re going to see some rather spectacular investment implosions with folks losing their shirts. Get your popcorn ready.

Comment by forgetfreeman 2 days ago

I'd be excited for the show myself if I had any idea how to prevent my portfolio from tanking when this clusterfuck finally unravels.

Comment by mikestew 2 days ago

Sibling comment says "diversify", and I tend to agree. I've seen some shit, man. 2000 dot bomb, 2008, bumps along the way. 2000, I was in tech stocks like everyone else, lost a bunch. 2008, learned my lesson and was much more diversified. Lost some money, but not nearly as much as others. It was amazing watching, say, the S&P crater while our portfolio..just didn't. It just went down a fair chunk, and came back later (and probably didn't come back as much as it did for those that held on to their equities).

Diversification is a smoothing function. You won't get as much upside holding 25-30% bonds, but your portfolio won't suffer as much on the downside. If you're young and not ready for boring old-people investments like bonds, at least limit your tech stock exposure. Go buy boring utilities or something, maybe Berkshire Hathaway B shares.

One other advantage to diversification that I hear very little about is this: if you have to sell in a down market, you can sell your bonds and hold on to your equities in the hopes they'll bounce back. Regardless, you're not held to selling depreciated assets like equities, you can sell the bonds which are boring, but probably actually went up while everything else turns to shit.

Comment by 2OEH8eoCRo0 2 days ago

A side effect of keeping a stock/bond asset allocation is that when the stocks tank you'll naturally be overweight on bonds, so you can sell bonds to buy stocks (the dip).

Comment by forgetfreeman 2 days ago

I mean yeah, diversify we must but idk anyone who had a retail portfolio that didn't eat shit in 2008 so it isn't real obvious where the bomb shelter is.

Comment by cmiles8 2 days ago

Stay market diversified and you will be fine in the long run. The AI bubble popping will be painful for all in the short term but a blip on the radar in the long term.

These hedge funds get wound up in complicated, leveraged, illiquid layered stacks of (often private) investment vehicles that go from highly profitable to financial nuke overnight. Thats how they just get wiped out while everyone else just has a bad day.

Ironically the whole point of “hedge” in hedge fund is for this to NOT happen but we’re seeing increasingly inexperienced players like here just building a financial nuke and then acting all surprised when it lights off.

Comment by holtkam2 2 days ago

That question is probably what inspired someone to create the first ever derivatives market

Comment by bwfan123 2 days ago

> What could possibly go wrong

A barometer of the mania and one for the history books. A 23 year old wunder-kind publishes a 156 page prophesy with a catchy title which was lapped up by the silicon valley elite and funded to the tune of 10s of Billions. And, not sticking to his lane, the wunder-kind enters the finance world thinking his brilliance translates there too, and he was promptly taken to the woodshed by the wall street sharks.

Comment by cmiles8 2 days ago

Wall Street eats these types for breakfast and then moves onto another meal for lunch. Once more sophisticated players smelled blood in the water they just had a field day here. There are many more setups out there like this and there’s a whole army of folks just salivating for when they can blow up more AI over-leveraged financial nukes inexperienced and FOMOed investors have assembled.

Comment by bwfan123 2 days ago

> leveraged financial nukes inexperienced and FOMOed investors have assembled

A lot of debris waiting to happen in data-center debt for sure. The next several years are going to be interesting with more of these type of blowups. This is a canary in the ai-wreck coalmine.

Comment by blitzar 2 days ago

If you are going to send fools, they will be parted with their money.

What worries me most, is that people think this guy is some kind of genius.

Comment by timmytokyo 2 days ago

His good friend Dwarkesh should have him back on the podcast.

Comment by swyx 1 day ago

you guys are acting like he's not still a 23 year old self made billionaire that is not in jail.

Comment by scrlk 3 days ago

> Aschenbrenner party blamed short sellers who targeted the firm’s positions for exacerbating the fund’s losses, the letter said. The letter compared Situational’s experience to a bank run.

4 years ago, it was SBF blaming Changpeng Zhao for shorting FTT and triggering a run on FTX.

Now another EA has followed the path of making a lot of money relatively quickly and losing it just as fast, using the exact same arguments for why it happened.

Comment by mamonster 3 days ago

>Now another EA has followed the path of making a lot of money relatively quickly and losing it just as fast, using the exact same arguments for why it happened.

I would be very interested to know what he did with the management and performance fees (and how much they were) he gathered over the last 3 years. Just the perf fees from 2025 are probably enough to set him up for life. If he reinvested not so great.

Comment by hn_throwaway_99 3 days ago

> I would be very interested to know what he did with the management and performance fees

I mean, I'm pretty sure he pocketed the money and got richer. Most hedge fund compensation structure has always (ironically, I'd add, given the name "hedge" fund) incentivized volatility over long term performance.

Comment by stephbook 3 days ago

Even Wirecard – a fraudulent German bank missing some billions of euros and run by a Russian spy – always blamed bad press.

Denials mean nothing.

Comment by cmiles8 2 days ago

He had to liquidate everything that’s liquid and is left, seemingly, with some iffy-looking things that have paper returns but are broadly illiquid. Thats a disaster for a fund no matter how you slice it.

Comment by RIMR 3 days ago

Sounds like someone took huge risks, incurred huge losses, and thought they were entitled to always win. It honestly feels good seeing these folks get knocked down a peg.

Comment by 2PqboPPmKegvanx 3 days ago

>Now another EA has followed the path of making a lot of money relatively quickly and losing it just as fast

let's be clear here - he didn't actually "lose" a ton of money. he was up 439% net in the first half of 2026.

his issue was getting margin called due to being short on software (which went up) and long on AI infra (which went down) - getting margin called != losing money.

Comment by chollida1 3 days ago

> let's be clear here - he didn't actually "lose" a ton of money. he was up 439% net in the first half of 2026.

He's down 67% on the month. He most certainly lost alot of money.

He'll be fine and i think he'll be successful at raising more money, and he's still up on the year as far as I've been told by LP's, but he sure did lose alot of money this month.

Comment by chaos_emergent 2 days ago

Aren’t month over month gains and losses aren’t particularly surprising nor noteworthy when you’re operating a leveraged fund? Shouldn’t one expect higher volatility, but also higher returns?

Comment by chollida1 2 days ago

yes, monthly returns are expected to be volatile for a fund like this.

No in that, no LP wants 2/3rd down months. That kind of swing is insane.

That' means any LP that invested in the past 3 moths is completely wiped out, as in their full investment into the fund is at zero.

Now most LP's are probably investors for 6 months or more so they'll be ok.

What I'd be worried about is that if its true that he liquidated his entire public portfolio and only holds privates, where are the returns going to come from when anthropic is currently valued at what it is likely to go public at, and where is investor liquidity going to come from when they want to redeem.

He looks like he's turning his fund into a venture capital fund, which might be for the best given that he seems good at that and poor at running a hedge fund that invest in public securities.

Comment by uncivilized 3 days ago

Yes he lost a ton of money. He went from being up as much as you said to up only 80% and getting liquidated at that point. If it weren’t for Citadel stepping in to buy his investments who knows how much worse it could have gotten.

The only thing you can argue is realized vs unrealized.

Comment by bigstrat2003 2 days ago

Unrealized losses do not count as losing money (and similar for gains, of course).

Comment by 2 days ago

Comment by BoorishBears 2 days ago

They do once you're getting margin called.

Comment by uncivilized 2 days ago

Tell that to Leopold

Comment by 3 days ago

Comment by mancerayder 2 days ago

Wait, he was heavy in AI while shorting software?

What happened to the word hedge in hedge fund?

Comment by 3 days ago

Comment by asats 3 days ago

>Even including July's losses, the fund remains up about 80% on the year

Spectacular blowup and a lesson on leverage, but let's not miss this line.

Comment by cmiles8 3 days ago

You’re missing the core story which is that they don’t have a returns crisis they have a liquidity crisis. Finds don’t blow up because they have bad returns. Funds implode because they have no cash to cover their calls and other needs for cash.

Comment by asats 1 day ago

Nothing I wrote implies that I don't understand that distinction. What I'm saying is that despite this implosion he is still up ytd, so this liquidity crisis shouldn't be interpreted as him/his fund going bankrupt as many seem to want to read it.

Comment by windexh8er 2 days ago

But that's not what they want to see. They want to see that AI is a savior for all. The psychosis of what AI is, especially in these comment walls, is unfortunately and spectacularly real.

Anyone who's done any amount of investment can see this through the lens of history and I'm right there with you. This is the Lehman Brothers stage of the game and SA could be that "one". But Bro, we're still up 80%! - even WSB isn't filled with this level of ignorance.

Comment by alyeska2 2 days ago

I don't understand what you're arguing here.

A fund went up 400% by making a few highly leveraged, concentrated bets. The market moved against its leveraged positions and it was forced to quickly sell to a rival fund, at only an 80% profit.

Nothing about that is meaningfully the same as Lehman Brothers other than the most superficial aspect of "A financial thing went down fast"

Comment by windexh8er 2 days ago

You made an account and this is your first comment? C'mon.

Comment by asats 1 day ago

Honestly I have no idea what you are even replying to. My comment was essentially "The fund bet big and lost, but don't read it as him going bankrupt" as I saw many people interpret it that way.

I find the emotional charge in your message quite strange, and the "psychosis" might be you projecting something.

Comment by bagacrap 2 days ago

Well micron is up 165% on the year so he could have just bought a single stock and done a lot better. The point being that you wouldn't consider someone a genius if they did that, just lucky.

Not sure why anyone thought he was a brilliant investor to begin, as there's always going to be at least one investor of all the millions out there who makes a radical bet and is up 1000%, just like powerball has winners.

Comment by bpodgursky 3 days ago

It's hopeless, people see what they want to see.

Comment by ymolodtsov 3 days ago

I like how Matt Levine formulated it.

His thesis was correct. The problem is, his thesis was measured in years if not decades when his funding was measured in days and hours.

Comment by bagacrap 2 days ago

I mean that's always the case... we all know that stocks in general are going to be up 30 years from now. But we don't all leverage up 400%.

Comment by ymolodtsov 2 days ago

It was specific stocks and then he shorter some others very presciently. He was still up 80% after the collapse, you don't get that in 6 months with S&P 500.

Comment by alasr 3 days ago

Earlier on HN:

Martin Shkreli breaks down the collapse of Situational Awareness - https://news.ycombinator.com/item?id=49119380

Edit: added context

Comment by malfist 3 days ago

Why are you promoting content by Martin Shkreli? You know, the guy who committed securities fraud to rip off desperate patients?

Comment by loco5niner 3 days ago

I really don't like this guy, seriously he's a shark (he's probably right, but what a jerk): "If you know somebody has to liquidate, the best thing you have to do, unfortunately, sadly, Darwinian is to go sell all the positions you have in common, then start shorting everything they have. It accelerates the downfall as quickly as you can." of course then he says 'It's nothing I would ever do...'

Comment by infecto 3 days ago

That’s truly the playbook when you are on the other side of a levered firm though.

Comment by loco5niner 3 days ago

Yeah, probably. Its too bad.

Comment by ymolodtsov 3 days ago

If there's any purpose in hedge funds as a structure it's that they provide liquidity for the market. So it's in everyone's best interest to let them do price discovery against each other.

Comment by bagacrap 2 days ago

It's not just liquidity. Price discovery helps everyone. The earlier the correct price is discovered, the less we're all screwed when the bubble pops. I think they're rewarded too well for the function they serve but whaddya gonna do.

Comment by ymolodtsov 2 days ago

I mean, most of them underperform S&P, at least after fees.

Comment by bagacrap 1 day ago

I think on average they match a typical 60/40 portfolio on a risk adjusted basis. The goal is less to out perform long term and more to avoid big downturns (hence "hedge").

I do think there are some firms that have the skill to out-perform long term, but then the average is dragged down by ones like the subject of this article.

Comment by ymolodtsov 1 day ago

Rentech surely exists but you can't become their LP, which allows the median hedge fund to exist, yes.

As for the strategy, that's the idea but all of them market themselves on the returns first and foremost.

Comment by quickthrowman 2 days ago

Too bad for the people that were overleveraged? I don’t see why, they assumed too much risk and lost. This isn’t a WSB guy blowing up, it’s a collection of capital from sophisticated investors that understand the risks.

Comment by infecto 3 days ago

Why too bad? This is how the market ultimately comes to the right price.

Comment by literalAardvark 3 days ago

Not really.

Using leverage has risks that you're supposed to understand before you do it.

It's not a free lunch, unless you're putting the sharks' interest ahead of yours. Or clueless, which was the case here, as L.A. is not a trader and has no business running a fund.

Comment by literalAardvark 3 days ago

Because hn is primarily about competence, knowledge and tech, which Martin has in spades.

The arguments against him barely hold water in general anyway.

Comment by fred_is_fred 3 days ago

A federal jury sure thought they held water.

Comment by literalAardvark 3 days ago

Martin was convicted on three counts of securities fraud. The TL;DR is he was shilling a successful fund while sitting on massive losses. A Madoff kinda thing.

This has nothing to do with what people actually hate him for, and for which he was not convicted, because extracting money from a captive clientele is exactly what the US healthcare system is designed to do.

Comment by eigenspace 3 days ago

lmao

Comment by forgetfreeman 2 days ago

So competent sociopaths get their roses on HN? Good to know.

Comment by rib3ye 3 days ago

He has done more for wallstreet-to-mainstreet transparency than you believe.

His investor literacy youtube backlog is unusually deep and as of yet has only shilled his own trading product.

But your point is valid, he will never live down the fraud conviction and his face is so punchable.

Comment by dgellow 3 days ago

The shady crypto projects he did after his release are also good reasons to distrust the guy

Comment by 3 days ago

Comment by alasr 2 days ago

Why do you think that just sharing a link to an earlier HN post means 'promoting' someone? I referenced the HN post because I found that it's less about Martin Shkreli himself and more about a quality conversation with good analysis about the inner workings of 'Hedge fund' world and market dynamics.

If you've a better source, share it; I'll have a look and might use that one in the future. Otherwise, if you can't contribute in a constructive manner, stop making baseless comments about others intention without understanding them first.

Comment by gessha 3 days ago

You can still learn from thieves and crooks. Especially if they break down what they did and how they did it.

Comment by dgellow 3 days ago

Just keep in mind you might be the mark of his current scheme

Comment by baggachipz 3 days ago

He's an absolute ghoul, and to see sibling comments praising him breaks my heart. Yeah, he "did his time", but he also took advantage of sick people for immense profit. You don't get a pass for that.

Comment by 2 days ago

Comment by malfist 2 days ago

He's a person that has told the whole world who he is, and some people, especially temporarily embarrassed billionaires on this platform, love him for his unmasked self.

Comment by WarmWash 3 days ago

Like black hats getting cyber sec jobs, they probably know a thing or two.

Comment by jakevoytko 3 days ago

If you’re gonna be a hater you at least gotta do it right! The pricing and the securities fraud were two separate things you can count against him.

Comment by infecto 3 days ago

He is one of the few folks in finance who regularly streams and is directionally interesting. He served his time.

Comment by r_lee 3 days ago

I don't think those two cases are related

he's a relatively well known figure in finance and pharma investing

Comment by petesergeant 3 days ago

Because he’s an expert.

Edit: I don't do podcasts but this is absolutely worth some of your time to watch.

Comment by jvuygbbkuurx 3 days ago

He has served his time for those crimes

Comment by ForHackernews 3 days ago

seems like someone who is knowledgeable about financial shenanigans

Comment by zetanor 3 days ago

Can you provide a comparable or superior analysis by someone else?

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Comment by bagacrap 2 days ago

I don't understand why this thing is called a hedge fund. Usually, a hedge fund makes many non-correlated bets across many markets (commodities, stocks, bonds, public and private markets).

This guy made exactly one bet, which is that AI would eat software (long AI hardware stocks, short Adobe etc), leveraged it to the tits, and kept adding more leverage even as the trade moved in his favor.

Where is the "hedge"? Normally we just call this a "fund".

Comment by foltik 3 days ago

Where do I sign up to get $100M to dump into long AI positions?

Comment by sudb 2 days ago

I found a tweet purporting to show the letter that Leopold sent to his LPs - it looks pretty thoughtful and doesn't sound as bad as some news sources seem to be portraying.

https://x.com/tbpn/status/2083226453509030285

Comment by bagacrap 2 days ago

What exactly do you think he's gonna tell his clients? "Oops haha I'm a fraud"

Comment by sudb 2 days ago

Obviously not, no need to patronize. Did you read it? It seems to be honest about the numbers but it's pretty skillfully written to reassure.

Comment by bagacrap 2 days ago

I don't see how this is a response to my riposte. Of course he's going to try to reassure his investors so they don't take back what's left of their money. It's skillfully written to reassure people who were foolish enough to trust someone with zero investing experience, I guess. It is really a lot of words to describe getting margin called.

> honest about the numbers

His books are not public but I would bet my house that the numbers in the letter are carefully chosen to deceive. He reportedly started with 225M and gained 1500% or thereabouts, I.e. 16x. That gets you to 3.6B. But the assets were 45B at their peak. So then we have something like 40B other investment dollars coming in after he got famous. Two thirds of that he proceeded to set on fire. I don't know who would believe he's somehow still "up" YTD and worth leaving their money with. If anything this whole ordeal is an amazing advertisement for Ken Griffin.

Comment by redwood 3 days ago

Incredible that the founder is engaged to be wed this very weekend to the chief of staff to Anthropic's CEO

Comment by energy123 2 days ago

He played his cards well given the incentives. Most investors wouldn't tolerate such recklessness, and accordingly, most funds have to operate under strict risk management or they don't get funded. PMs at multi managers are only allowed about 5-8% drawdowns.

Leopold's public visibility gave him access to dumb money whales who allowed him to personally profit off the variance by collecting bonuses when times were good, leaving the investors with the bag when the blow up happens. These investors got lucky that there were still gains after the margin call. Being up 80% after such a large drawdown is bad performance on a risk adjusted basis and is not distinguishable from chance due to the magnitude of the variance.

Comment by bagacrap 2 days ago

Yes, he combined one good bet with the ability to charm dumb whales. (Actually this sounds like a lot of startup founders.) And I'm sure he thinks it's still a good bet, but he has no idea what risk management even is. In his letter to investors, he swears he learned his lesson, but I wonder whether that lesson regards leverage, or more broadly hubris.

Comment by energy123 2 days ago

A lesson learned would be a commitment to quantify the allowed risk as a proportion of VaR or some equivalent approach that holds his fund to account as an investment mandate. Or a promise that he will do something like this in the coming weeks. The lack of specificity of the commitment keeps me sceptical, but time will tell.

Comment by bagacrap 1 day ago

Lesson learned would be to hire professionals to do the investing, while he sticks to whatever he actually knows, if anything. (At this point, mainly sweet talking investors, it seems.)

Comment by bwfan123 2 days ago

Deja-vu from dot-com. The tech-wreck had similar hedge-fund road-kill. Munder net-net fund comes to mind. A lot of hubris and leverage on a thesis that is not proven, and liquidity matters. Data-center debt will likely see similar debris in the next several years.

Comment by 3 days ago

Comment by neom 3 days ago

Worth noting, even with the margin call, he's still up 80% on the year: https://www.ft.com/content/a0a5e3a7-c4e6-42a6-9a7b-a780422bc...

Comment by bagacrap 2 days ago

I'm pretty sure that's time weighted return that's being quoted, and not dollar weighted. What that means is that after he was up 400%, he accepted a lot more external investment. Then he lost 67%. So many/most investors lost a lot of money. "Time weighted" tracks a single dollar invested on January 1 while "dollar weighted" describes whether he actually "created" or "destroyed" value for his clients overall.

Comment by bix6 3 days ago

Situational Awareness. Fitting name.

Comment by grg0 2 days ago

He definitely is aware of the situation now.

Comment by 3 days ago

Comment by sakopov 2 days ago

Equally interesting to me is how Citadel made up a rumor about the FED raising rates at this weeks FOMC meeting causing a historic selloff in AI stocks which then allowed them to pick up Situational Awareness on the cheap.

Comment by bagacrap 2 days ago

To be honest, if that's even true, they've done us all a service. Leverage is the biggest driver of investing bubbles and bubbles hurt all investors (401ks) and even the economy in the sense that they create huge capital dislocations. Like the fact that all software engineers are being forced to work on something marketable as AI.

Comment by bormaj 2 days ago

Any source on this? Market data was already implying a hike by year end and the Fed held steady so not sure what the takeaway is here

Comment by 2 days ago

Comment by cmiles8 2 days ago

"Smart men go broke three ways - liquor, ladies and leverage."

Comment by ElProlactin 2 days ago

And if you're really good, you do all three.

Comment by aanet 2 days ago

SBF would agree

Comment by Biologist123 2 days ago

And the rest you squander. (RIP George Best).

Comment by wxw 2 days ago

> Situational’s gains earlier in the year were so large that, even including July’s losses, the fund remains up about 80% on the year, the letter said.

80% return is still excellent.

Comment by francisofascii 3 days ago

Which AI stocks suffered a rout?

Comment by marcosdumay 3 days ago

SPCX is getting lower and lower, MSFT is currently down 15% in an year, Oracle is close to 50% YoY...

Comment by mr_toad 2 days ago

It’s an odd kind of bubble that slowly deflates over the course of a year.

Comment by bonesss 2 days ago

To my speculative thinking the downslope of this LLM hype bubble might be different shaped because of the underlying assets and geopolitical situation.

Securing data center land, contracts, water rights, and execution capacity doesn’t seem like a terrible position to have in a digital, cloud, ML, crypto, and ‘prediction’ heavy future. Especially for the big players who are also cloud providers who might capture big chunks of secondary growth even if they fail in their LLM effort (and ditch the hardware?).

The LLM stuff seems very over priced, but also Ukraine is making a million or whatever drones a year all with a need for ML-powered planning, routing, and terminal guidance. Elons space data centres seem kinda dumb, but in a world where Palantir needs to be tightly in the loop for orbital or near-orbital operations, or autonomous orbital defence... The worse things get in those ways the stronger the long-term positioning of the cloud giants to build or capture critical defence operations and associated spending.

We’ve learned Skynet as AGI won’t come from the tech, so the bubble gasses out. But Skynet as Skynets military is here, now, and the AI/cloud providers own key logistical elements, so the bubble loses gas slowly.

Comment by rullelito 2 days ago

> The LLM stuff seems very over priced, but also Ukraine is making a million or whatever drones a year all with a need for ML-powered planning, routing, and terminal guidance

I bet Ukraine would love getting more entangled and dependent on a treacherous USA and the entities it controls from t The White House..

(do people not follow world events?)

Comment by marcosdumay 2 days ago

The only AI-only stocks you will find are Oracle and Space-X. Microsoft, Meta and Alphabet are all reasonably diversified companies that can possibly take the loses without breaking.

The thing about this bubble is that everything publicly accessible is already a step or two removed from it. All the growing, and all the current popping are happening on those rich-people funds the article is about.

Comment by bagacrap 2 days ago

https://www.cnbc.com/2026/07/31/why-leopold-aschenbrenner-si...

Nebius, SanDisk, sharonai, etc

Rout is relative as they are still up big yoy. The problem is that he saw them triple in value and THEN added more leverage.

Comment by boringg 3 days ago

Yesterdays news. High leverage. Sounds like citadel got a deal.

Comment by 1vuio0pswjnm7 2 days ago

26 Jun 2025 18:15:45 UTC

Situational Awareness: A One-Year Retrospective

https://www.lesswrong.com/posts/EGGruXRxGQx6RQt8x/situationa...

https://news.ycombinator.com/item?id=44389862

[ok]

30 Aug 2025 07:36:18 UTC

Situational Awareness: The Decade Ahead (2024)

https://situational-awareness.ai/

https://news.ycombinator.com/item?id=45072686

[ok]

12 Oct 2025 15:02:14 UTC

Situational Awareness: The Decade Ahead

https://situational-awareness.ai/

https://news.ycombinator.com/item?id=45558688

[ok]

29 Dec 2025 12:33:40 UTC

Situational Awarness The Decade Ahead (2024) [pdf]

https://situational-awareness.ai/wp-content/uploads/2024/06/...

https://news.ycombinator.com/item?id=46420030

[ok]

03 Mar 2026 13:19:26 UTC

Situational Awareness: the decade ahead (2024)

https://situational-awareness.ai/

https://news.ycombinator.com/item?id=47231897

[ok]

05 Mar 2026 15:19:17 UTC

Situational Awareness (2024)

https://situational-awareness.ai/

https://news.ycombinator.com/item?id=47262572

[ok]

10 May 2026 02:47:06 UTC

Situational Awareness Kindle eBook ePub

https://blog.cahillanelabs.com/kindle/epub/llm/2026/05/10/si...

https://news.ycombinator.com/item?id=48080509

[ok]

18 May 2026 19:05:28 UTC

Situational Awareness LP Q1 13F Filings Are Public

https://kiankyars.github.io/investing/2026/05/18/situational...

https://news.ycombinator.com/item?id=48184085

[ok]

22 May 2026 15:55:31 UTC

Leopold Aschenbrenner: Situational Awareness Two Years On

https://philippdubach.com/posts/aschenbrenners-receipts/

https://news.ycombinator.com/item?id=48237583

[ok]

11 Jun 2026 14:54:19 UTC

Situational Awareness: The Decade Ahead

https://situational-awareness.ai/

https://news.ycombinator.com/item?id=48491190

[ok]

30 Jul 2026 04:09:57 UTC

Leopold Aschenbrenner''s Situational Awareness seeks capital raise after AI rout

https://www.ft.com/content/280336bf-dbed-405f-b38e-5af644a21...

https://news.ycombinator.com/item?id=49106039

[ok]

30 Jul 2026 12:38:18 UTC

Can the Situational Awareness Hedge Fund Raise Capital After Its 439% H1 Gain?

https://www.disruptionbanking.com/2026/07/30/can-the-situati...

https://news.ycombinator.com/item?id=49109183

[dead]

30 Jul 2026 15:51:03 UTC

Situational Awareness Liquidates Public Positions

https://www.cnbc.com/video/2026/07/30/leopold-aschenbrennera...

https://news.ycombinator.com/item?id=49111722

[ok]

30 Jul 2026 16:00:33 UTC

Citadel Buys Situational Awareness''s Stock Portfolio After Big Losses in AI

https://www.wsj.com/finance/citadel-buys-situational-awarene...

https://news.ycombinator.com/item?id=49111879

[ok]

30 Jul 2026 16:10:00 UTC

Citadel buys Situational Awareness after steep AI losses

https://www.ft.com/content/5fb44089-ecdf-4b48-bc14-1e8b4682b...

https://news.ycombinator.com/item?id=49112025

[ok]

30 Jul 2026 16:14:16 UTC

Leopold Aschenbrenner''s Situational Awareness seeks capital after AI rout

https://www.ft.com/content/280336bf-dbed-405f-b38e-5af644a21...

https://news.ycombinator.com/item?id=49112092

[ok]

30 Jul 2026 18:54:46 UTC

Citadel buys most of Situational''s stock holdings after AI share rout

https://www.reuters.com/technology/citadel-buys-most-situati...

https://news.ycombinator.com/item?id=49114131

[ok]

30 Jul 2026 19:01:31 UTC

Is the fall of Situational Awareness the first domino?

https://news.ycombinator.com/item?id=49114208

[ok]

31 Jul 2026 01:13:54 UTC

Citadel buys Situational Awareness equity holdings after steep AI losses

https://www.ft.com/content/5fb44089-ecdf-4b48-bc14-1e8b4682b...

https://news.ycombinator.com/item?id=49117941

[dead]

31 Jul 2026 05:36:28 UTC

Martin Shkreli Breaks Down the Collapse of Situational Awareness [video]

https://www.youtube.com/watch?v=RJdgh9eEZvw

https://ne

Comment by 1vuio0pswjnm7 2 days ago

31 Jul 2026 05:36:28 UTC

Martin Shkreli Breaks Down the Collapse of Situational Awareness [video]

https://www.youtube.com/watch?v=RJdgh9eEZvw

https://news.ycombinator.com/item?id=49119380

[ok]

31 Jul 2026 13:25:57 UTC

Citadel buys Situational Awareness equity holdings after steep AI losses

https://www.ft.com/content/5fb44089-ecdf-4b48-bc14-1e8b4682b...

https://news.ycombinator.com/item?id=49122857

[ok]

31 Jul 2026 13:37:36 UTC

Situational Awareness Down 67% in July in AI Stock Rout

https://www.wsj.com/finance/investing/situational-awareness-...

https://news.ycombinator.com/item?id=49122994

[ok]

31 Jul 2026 15:20:19 UTC

The Loss of Situational Awareness

https://www.theverge.com/ai-artificial-intelligence/973467/a...

https://news.ycombinator.com/item?id=49124243

[ok]

Comment by 2 days ago

Comment by next_xibalba 3 days ago

And yet:

> Despite the July losses, Situational Awareness remains up about 80% on the year and holds a portfolio of investments in private companies including Anthropic.

80% return (YTD) is the type of performance for which many hedge fund managers would sacrifice their first born.

Comment by 2 days ago

Comment by eigenspace 3 days ago

Quite the funny headline. It initially made me think that someone had come up with some sort of quantitative measure of the situational awareness of traders, and was claiming that there was an increase in traders making dumb trades that misread the situation or something.

Ironically, I would describe this selloff as an increase in situational awareness.

Comment by willchis 3 days ago

Ha yes it definitely reads like an Onion headline.

Comment by 2 days ago

Comment by HarHarVeryFunny 3 days ago

Well, effectively that is kinda what it is saying, although it's the situational awareness of one particular trader it's referring to. The situational awareness of Citadel who scooped up their portfolio at fire sale prices seems quite good!

Comment by deadbabe 3 days ago

I would definitely be interested in seeing someone come up with some kind of “situational awareness” index, to evaluate how much the market actually knows about what it’s investing in.

Comment by eigenspace 2 days ago

It'd only really work retrospectively, but would be quite fun to see. Especially ones that investigate previous bubbles.

Comment by NooneAtAll3 3 days ago

[flagged]

Comment by 13unk0wn 3 days ago

> Leopold Aschenbrenner’s hedge-fund firm Situational Awareness is down around 67% so far in July after incurring heavy losses on AI stocks...

Comment by HarHarVeryFunny 3 days ago

More than just down - liquidated (sold to Citadel) due to pending margin calls.

Comment by jrrv 3 days ago

Literally the first line

Comment by temp0826 3 days ago

When I read a title it helps me to determine whether I want to read it or not. This one is tricky and confusing because the company name is stupid and was probably picked for the clickbait potential. This is absolutely one where I read the comments before the link.

Comment by bspammer 3 days ago

The link is right there, and the answer is in the first paragraph.

Comment by an_account 3 days ago

All I see is a paywall

Comment by iso1631 3 days ago

All I see is an accusation of being a robot

Comment by bspammer 3 days ago

The paywall does not cover the first paragraph

Comment by 3 days ago

Comment by tonetheman 2 days ago

[dead]

Comment by Aboutplants 3 days ago

[flagged]

Comment by drexlspivey 3 days ago

Pardon for what? The crime of losing money?

Comment by xenospn 2 days ago

Good for one free crime of your choice

Comment by laidoffamazon 3 days ago

Anything he wants!

Comment by RIMR 3 days ago

Believe it or not, you are legally bound to act in the interests of shareholders.

Though you cannot be pardoned from civil stuff, and the options to actually prosecute are pretty slim, so I doubt it.

Though, even if this is just tongue-in-cheek, you can literally buy a pardon in America right now with just a little bit a money into the pockets of the Trump family, in case you didn't get the joke (that the US government is literally pro-corruption right now).

Comment by mikestew 3 days ago

Believe it or not, you are legally bound to act in the interests of shareholders.

Though a common Internet trope, this is incorrect. However, “legally” or not, you might find yourself unemployed should you ignore the shareholders.

Comment by 3 days ago

Comment by 2PqboPPmKegvanx 3 days ago

what law are you insinuating Aschenbrenner broke?

Comment by 2 days ago

Comment by jghn 3 days ago

I say this with absolutely no evidence and only stating it as a hypothetical. But as an example it would be plausible that insider trading was involved.

Comment by 3 days ago

Comment by infecto 3 days ago

Then why state it?

Comment by axus 3 days ago

Because Hacker News appreciates discussion of the theoretical, that exceeds the bounds of what mainstream society thought was possible.

Comment by infecto 3 days ago

[flagged]

Comment by jghn 2 days ago

What I was specifically pointing at was it being a heavy AI play combined with the direct relationships he has at high levels with AI companies. For instance the chief of staff to Anthropic's CEO.

What I was specifically referring to was a hypothetical that he could need a pardon. There was a question on what possible crime could be involved.

All that said, I'd imagine if this was really happening that we wouldn't have today's headline in the first place.

Comment by 2PqboPPmKegvanx 3 days ago

trust us, it's quite clear you have no knowledge about the topic you are speaking on.