AI investor Leopold Aschenbrenner forced to unwind all public stock positions after steep losses, sources say
The battered hedge fund founded by former OpenAI researcher Leopold Aschenbrenner is unwinding many of its trades after big losses on artificial...
Key points
- The battered 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 left it scrambling to raise cash, according to people familiar with the matter.
- The 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, people familiar with the deal said.
- 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.
What happened
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The battered 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 left it scrambling to raise cash, according to people familiar with the matter. The 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, people familiar with the deal said. 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. 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, according to people familiar with the discussions.