The name was a warning. Situational Awareness, the AI-focused hedge fund launched by 24-year-old former OpenAI employee Leopold Aschenbrenner, has cratered in spectacular fashion, selling most or all of its public stock portfolio to Ken Griffin’s Citadel after a brutal stretch for AI stocks. The numbers are staggering. According to CNBC, the fund was worth $45 billion at the start of July. It is now worth roughly $10 billion after the fire sale. That $35 billion implosion would shatter the previous record for trading losses, held by Archegos Capital Management, which burned through $8 billion in ten days back in 2021. The fund’s biggest bets—Nebius Group, Sandisk, Micron, and CoreWeave—are all down more than 35% this month.
The whole saga reads like a parable of Silicon Valley hubris meeting Wall Street reality. The fund was named after Aschenbrenner’s series of essays predicting superintelligence by 2027. “We are building machines that can think and reason,” he wrote, a claim that is doing a lot of metaphysical heavy lifting. He told podcaster Dwarkesh Patel his tiny team would have “way more situational awareness than any of the people who manage money in New York.” Backers included Stripe co-founders Patrick and John Collison, Meta AI leaders Daniel Gross and Nat Freedman, and eventually Jane Street. The fund had eight employees. Four were investment professionals.
Ivanka Trump called the essays “an excellent and important read.” Axios praised them as an “eye-opening synthesis.” This is the part that sticks with me. A 24-year-old’s first hedge fund, built on a philosophy that AGI is real and arriving on a specific timeline, attracted capital from some of the smartest people in tech and finance. It then vaporized $35 billion in a matter of weeks by concentrating in the exact stocks that would get hammered first when AI sentiment soured. The Wall Street professionals on the other side of those trades are probably still laughing.
