Situational Awareness, the AI-focused hedge fund founded by former OpenAI researcher Leopold Aschenbrenner, has reportedly sold most of its public stock portfolio to Citadel after suffering major losses across several technology and infrastructure investments.
The transaction represents a significant reversal for a fund that had generated a reported return of 439% through June 2026 and reached as much as $45 billion in assets under management at its peak.
Despite selling a large portion of its publicly traded holdings, Situational Awareness has retained its investments in private companies. Its most valuable private position is reportedly a stake in Anthropic worth approximately $5 billion.
That holding could become increasingly important as the hedge fund attempts to recover from losses in the public markets.
Citadel, the investment firm led by billionaire Ken Griffin, purchased the majority of Situational Awareness’ public equity portfolio following a sharp decline in several of the fund’s largest positions.
The financial terms of the transaction were not publicly disclosed.
The sale reduced Situational Awareness’ overall assets to approximately $10 billion, compared with around $20 billion in recent months and a reported peak of as much as $45 billion.
This means the fund’s assets may have declined by roughly $35 billion from their highest reported level, representing a decrease of nearly 78%.
The portfolio sale allows Situational Awareness to reduce its exposure to volatile public stocks while giving Citadel access to technology and infrastructure investments at substantially lower prices.
Situational Awareness had concentrated much of its public portfolio in businesses expected to benefit from rising investment in artificial intelligence.
Major holdings reportedly included:
South Korean memory chip producer SK Hynix
Data storage company Sandisk
Clean energy developer Bloom Energy
Cloud computing provider Nebius Group
Each of these investments declined by more than 30% during the previous month.
The stocks came under pressure as investors questioned whether the billions of dollars being spent on AI data centers, chips, electricity and cloud infrastructure would generate sufficient revenue in the near term.
The fund’s losses were intensified by its use of leverage, which involves borrowing money to increase the size of an investment.
Leverage can multiply profits when stock prices rise, but it can also increase losses when prices fall. A 30% decline in a leveraged position can therefore create a significantly larger financial impact than the same decline in an unleveraged portfolio.
Before the recent market reversal, Situational Awareness had been one of the fastest-growing hedge funds focused on artificial intelligence.
The fund reportedly produced a return of 439% during the year through June 2026.
A $1 million investment growing by 439% would increase to approximately $5.39 million before fees and other expenses.
Assets under management reportedly expanded to as much as $45 billion during the fund’s strongest period.
However, the rapid decline in AI infrastructure stocks erased a substantial portion of those gains and forced the fund to reduce its public market exposure.
Aschenbrenner continued defending his AI investment thesis even as losses increased.
In a July 24, 2026 letter to investors, he reportedly described the market decline as one of the strongest buying opportunities since early 2025.
The fund invited clients to provide additional capital beginning August 1, 2026.
However, the request reportedly failed to attract the level of new commitments the fund had expected.
The lack of fresh capital may have made it more difficult for Situational Awareness to maintain its leveraged public positions during the market decline.
Selling the holdings to Citadel allowed the fund to reduce financial pressure without disposing of its most valuable private investments.
Situational Awareness reportedly retained its stake in Anthropic, the AI company behind the Claude family of models.
The investment is currently valued at approximately $5 billion.
Anthropic was valued at about $965 billion following a Series H funding round completed in May 2026.
At that valuation, the Situational Awareness stake would represent approximately 0.52% of the AI company, although the exact ownership percentage could differ depending on the type of shares, dilution terms and valuation method used.
Anthropic is also reportedly considering a public listing as soon as October 2026.
An initial public offering at a valuation above $965 billion could increase the value of the hedge fund’s stake. However, the final outcome would depend on Anthropic’s listing price, investor demand, lockup restrictions and the number of shares Situational Awareness is permitted to sell.
The $5 billion Anthropic holding represents approximately 50% of Situational Awareness’ reported $10 billion in remaining assets.
This makes the private investment one of the most important positions in the fund’s portfolio.
A 20% increase in the value of the Anthropic stake would add approximately $1 billion to its estimated value. A 50% increase would raise the position from $5 billion to about $7.5 billion.
A successful sale or public listing could therefore help Situational Awareness offset some of the losses generated by its public stock portfolio.
However, private company valuations do not always translate directly into cash. The fund may be restricted from selling its shares immediately, and the eventual market value could be higher or lower than the latest private funding valuation.
Anthropic is not the only private technology company remaining in the Situational Awareness portfolio.
The hedge fund has also invested in MatX, a semiconductor company developing computing hardware for artificial intelligence workloads.
Another private holding is Fluidstack, an AI data center and cloud infrastructure startup.
Fluidstack was reportedly discussing a new funding round in April 2026 that could value the company at approximately $18 billion.
These private investments allow Situational Awareness to maintain exposure to the AI sector even after reducing its publicly traded positions.
They also reflect Aschenbrenner’s broader belief that artificial intelligence will require massive investments in semiconductors, memory, computing capacity, energy generation and data center infrastructure.
Aschenbrenner launched Situational Awareness in 2024 after leaving OpenAI.
He was 25 years old at the time of the reported portfolio sale and had no professional trading experience before creating the hedge fund.
Aschenbrenner previously joined OpenAI’s superalignment team in 2023.
He had graduated from Columbia University as valedictorian at the age of 19 after enrolling at 15.
OpenAI dismissed him in 2024 over what the company described as an improper disclosure of internal information.
Shortly afterward, Aschenbrenner created Situational Awareness and raised several hundred million dollars from prominent technology and finance investors.
Early supporters of Situational Awareness reportedly included quantitative trading firm Jane Street.
Other backers included Stripe co-founders Patrick Collison and John Collison, as well as technology investors Daniel Gross and Nat Friedman.
The participation of experienced investors helped the new hedge fund raise significant capital despite its founder’s limited professional trading history.
The fund’s early performance appeared to validate its concentrated investment strategy.
However, the recent decline demonstrates the risks associated with combining leverage, concentrated holdings and highly volatile technology stocks.
Citadel’s acquisition of the portfolio is consistent with the firm’s history of purchasing assets from leveraged investors facing financial pressure.
Some of the stocks held by Situational Awareness were already similar to investments in Citadel’s portfolio.
This suggests Citadel may share the view that demand for AI chips, energy systems, data centers and cloud computing services will recover over the longer term.
Unlike a smaller or more heavily leveraged fund, Citadel may have enough capital to hold the investments through an extended period of volatility.
The purchase could therefore provide significant returns if AI infrastructure stocks recover from declines of more than 30%.
Situational Awareness has shifted from a rapidly expanding public market fund into a smaller investment operation whose future may depend heavily on private AI companies.
The fund reportedly moved from as much as $45 billion in assets to approximately $10 billion, while retaining a $5 billion position in Anthropic.
That means 1 private company may now account for around half of the fund’s remaining reported value.
A successful Anthropic public offering could deliver a major financial gain. A delay, lower valuation or restriction on share sales could create additional uncertainty.
For Situational Awareness, the next phase will depend less on short-term movements in public AI infrastructure stocks and more on the performance of Anthropic, MatX, Fluidstack and its other remaining private investments.
Share your thoughts about this article.
Be the first to post a comment!
