Key facts
- Situational Awareness hedge fund lost 67% of its value in July.
- The fund was forced to sell public equities to Citadel due to margin calls.
- Founder Leopold Aschenbrenner apologized to investors, admitting the fund neared permanent capital impairment.
- The fund remains up approximately 80% year-to-date and retains its stake in Anthropic.
- Aschenbrenner plans to implement changes in portfolio management and risk teams.
Leopold Aschenbrenner, founder of the AI-focused hedge fund Situational Awareness, has apologized to investors following a 67% loss in July. In a letter, Aschenbrenner admitted the fund came "closer to permanent capital impairment than is acceptable." The fund, which had grown to $45 billion from less than $1 billion since its early 2025 launch, was forced to sell the bulk of its public equities to Citadel due to margin calls. Aschenbrenner cited extreme moves in core AI positions, many of which dropped by half or more, and adverse trading dynamics that dried up market liquidity as reasons for the drawdown. To protect investor capital, the fund removed all leverage, closed all shorts, and eliminated reliance on portfolio financing. The fund now manages a fully-paid-for public book, preserving its private positions. Aschenbrenner takes responsibility and vows to implement changes across portfolio management and the risk team for greater resilience. Despite the July losses, the fund is still up approximately 80% year-to-date and has maintained its stake in Anthropic.