The hedge fund founded by former OpenAI researcher Leopold Aschenbrenner is unwinding many of its trades after big losses on artificial intelligence stocks and a bad bet against software stocks, according to people familiar with the matter.

Prime brokers for the fund, Situational Awareness, have been rushing to raise cash to meet margin requirements, the people said. Ken Griffin's Citadel hedge fund reached a deal to buy the fund's publicly traded assets, according to people familiar with the deal. Situational Awareness has sustained significant losses in recent weeks as its portfolio of AI infrastructure investments such as SK Hynix declined while short positions in software companies such as Adobe moved sharply against it, the people said.

The fund grew to as big as $45 billion at the start of July before big losses took hold, according to a person familiar with the matter. Several of the firm's prime brokers — including Bank of America, Goldman Sachs and JPMorgan Chase — have been working with the fund as it seeks to meet margin requirements or reduce positions in an orderly fashion. The brokers have been marketing a group of the firm's holdings on both the long and short side for sale prior to Thursday's start of trading, according to people familiar with the situation.

The situation remains fluid, and it couldn't be determined whether the firm was satisfying its margin calls through the sales. The firm had been negotiating to sell its stake in Anthropic, but it wasn't clear if that deal was done. A spokesman for the firm said reports that it was marketing its Anthropic stake are not accurate.

The fund's largest holdings at the end of the first quarter included Nebius Group, Sandisk, Micron and CoreWeave, according to filings. All four of those stocks are down more than 35% this month.

Background on Aschenbrenner

Aschenbrenner, 25, built the firm around the thesis that increasingly powerful AI systems would require a vast expansion of chips, memory, data centers and electricity generation. He became prominent after publishing a series of essays in 2024 arguing for this large-scale infrastructure buildout, ideas that became the intellectual foundation for Situational Awareness after he left OpenAI.

He graduated from Columbia University as valedictorian at age 19 before joining OpenAI's Superalignment team. He was fired in 2024 over what the company described as an improper disclosure of internal information; Aschenbrenner has disputed that characterization, saying he shared a largely nonconfidential planning document with outside researchers for feedback, and has said his dismissal followed tensions over warnings he raised about OpenAI's security practices. OpenAI has said those concerns were unrelated to his departure.

Aschenbrenner is engaged to Avital Balwit, chief of staff for Anthropic CEO Dario Amodei, according to an October profile in Fortune, which cited a Situational Awareness LP spokesperson. He also had a brief stint at a philanthropy-focused fund founded by FTX's Sam Bankman-Fried, according to Fortune. The size of the fund's losses and the amount it was seeking to raise couldn't immediately be determined.

Source: CNBC

#JPMorgan