Leopold Aschenbrenner's AI-focused hedge fund, Situational Awareness, experienced a devastating 67% loss in July, erasing a substantial portion of its earlier gains. This rapid decline transformed what had been a remarkable 439% gain in the first half of 2026 into a 80% year-to-date return even after the July drawdown. The fund, which had grown to as much as $45 billion by early July, was forced to sell most of its public equities to Ken Griffin's Citadel to meet urgent margin calls.
Key factors contributing to the collapse included highly leveraged positions in concentrated AI technology stocks. Significant holdings in companies like Nebius, which plummeted approximately 48% from its peak, and Sandisk, which fell 56% in just over a month, severely impacted the fund's public portfolio. Short bets against software companies like Adobe also moved unfavorably, squeezing the fund from both sides.
Despite the massive sell-off of public holdings, estimated to be around $16 billion before the unwind, Situational Awareness retained its private investments, including a significant stake in AI firm Anthropic. This Anthropic holding, valued at about $5 billion, will allow the firm to continue as a private investment vehicle, essentially an Anthropic holding company with a hedge fund attached. Prime brokers, including Bank of America, Goldman Sachs, and JPMorgan Chase, played a crucial role in facilitating the orderly sale of the fund's positions to Citadel.
Aschenbrenner had, in a July 24 letter to investors, remained optimistic, calling the tech rout a buying opportunity and inviting clients to add fresh cash on August 1. He pointed to a potential Anthropic IPO as a future catalyst. This stance was particularly striking as the fund simultaneously faced immense pressure from mounting losses and margin calls, demonstrating the extreme impact of leverage on a concentrated, high-growth strategy during a market downturn.
