The U.S. hedge fund 'Situational Awareness,' which has heavily invested in artificial intelligence (AI) stocks, reported a loss of approximately 67% in July alone. Following a sharp decline in stock prices that triggered a margin call, the fund sold off most of its holdings and halted leveraged investments.
According to the Wall Street Journal on July 30, founder Leopold Aschenbrenner expressed in a letter to investors, "I disappointed you this month," while explaining the losses incurred in July.
Situational Awareness had been aggressively investing in AI stocks, utilizing borrowed funds. However, as AI stocks plummeted in July, losses quickly mounted, prompting the firm to secure cash in response to margin calls from lenders.
Ultimately, the company sold most of its holdings to Citadel, an investment firm led by Ken Griffin. Aschenbrenner stated, "We have eliminated all leverage using borrowed money from our current investment assets."
Despite the significant losses in July, the fund still maintains an approximate 80% return for the year, thanks to substantial gains earlier in the year. By the end of May, the fund's return for 2026 had reached about 270%.
Aschenbrenner claimed that short-sellers betting against the fund's key investments exacerbated the losses. He likened the situation to a 'bank run,' where depositors withdraw their money all at once.
While most publicly traded stocks have been disposed of, investments in private companies like AI firm 'Anthropic' remain intact.
Founded nearly two years ago, Situational Awareness has grown its managed assets to over $20 billion. Aschenbrenner, who lacked professional investment experience, quickly gained market attention through aggressive investments in AI-related companies.
* This article has been translated by AI.
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