I wish I sold the top...

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Happy weekend folks, Jeff here. 

I wanted to flag the recent developments around Leopold Aschenbrenner and his hedge fund, Situational Awareness LP, as they’ve been circulating widely (including on X) and illustrate a classic case of leveraged, concentrated bets going badly wrong.

Quick background

Leopold Aschenbrenner (former OpenAI researcher, often called a “golden child” or “Nostradamus of AI” for his early calls) launched the AI-focused fund with no prior trading experience. 

The result?

It delivered extraordinary results: roughly 439% net returns for the first half of 2026 and over 1,500% since inception, scaling to more than $20 billion (some reports put peak AUM higher). The strategy centered on leveraged long exposure to AI infrastructure and related names (data centers, power, storage, GPU/cloud plays), with additional short positions in certain software names.

But then something went wrong…

A sharp rout in AI stocks in recent weeks hit the portfolio hard. Key holdings such as Bloom Energy and Sandisk dropped around 40% from end-June levels; other AI-infra names (e.g., those in the NBIS, CRWV, SNDK complex) saw declines well above 30–35%. At the same time, some of the fund’s shorts moved against it. With reported leverage around 400% (!!), the drawdown was amplified into equity-wiping losses — roughly 67% in July alone, according to reports.

Pressure from prime brokers and margin calls forced RAPID SELLING. On July 24, Aschenbrenner still sent investors a letter highlighting the strong YTD performance and framing the dip as a BUYING opportunity. 

However, by late Wednesday/early Thursday (July 29–30), the fund had negotiated the sale of the bulk of its public equities portfolio to Ken Griffin’s Citadel in a large block transaction (estimates around the $16 billion range for the public holdings). 

Rivals such as Millennium and Jane Street were also in the mix. The fund retains private holdings (including its Anthropic stake), but the public book is largely gone.

X has been full of the usual dark humor. One widely shared post from @GjMcGowan (quoting the FT piece on the capital raise / losses) simply read: “Tfw a client asks how you lost billions of dollars,” paired with a reaction video — capturing the mood pretty well.

Takeaways

Besides having a very “punchable looking” face 🥊…

This is a textbook reminder that strong thematic conviction + leverage + concentration can produce spectacular upside and an equally spectacular reverse to the downside.  “Not blowing up” was supposedly priority one and two at launch; the speed of the reversal (from 439% YTD to forced portfolio sale in weeks) shows how quickly that can change when markets move against you, and liquidity/margin constraints kick in.

Stay tuned as we follow this story and MORE…

To YOUR success,