Key facts
- Leopold Aschenbrenner's hedge fund, Situational Awareness, held $5.7 billion in SanDisk and $5.6 billion in Micron at the end of June.
- These two positions constituted 56% of the firm's US stock portfolio, valued at over $20 billion.
- The firm's direct stock holdings grew more than fivefold in the quarter ending June 30.
- SanDisk and Micron shares experienced significant declines of 47% and 29% respectively in July.
- Situational Awareness's portfolio lost 67% of its value in July, leading to margin calls and asset sales.
Leopold Aschenbrenner, the founder of the hedge fund Situational Awareness, made substantial investments in SanDisk and Micron shortly before the fund's collapse in late July. According to its quarterly portfolio update, Situational Awareness held stakes worth $5.7 billion in SanDisk and $5.6 billion in Micron as of June 30. These positions represented 56% of the firm's US stock portfolio, which totaled just over $20 billion. This marked a significant increase from the end of March, when the firm's direct holdings were less than $4 billion, primarily in Bloom Energy.
The firm also increased its investment in TSMC and established a $1.2 billion stake in Nebius. Concurrently, Situational Awareness reduced its exposure to options, cutting its number of put positions from 16 to one, suggesting an increase in risk appetite. The firm's concentrated bets on SanDisk and Micron, coupled with a reduction in protective put options, highlighted a shift towards higher-risk positions.
However, the strategy proved disastrous. Shares of SanDisk and Micron plummeted by 47% and 29% respectively in July, as investors took profits amid concerns over high valuations. This sell-off, combined with a broader decline in AI stocks, led to a 67% loss for Situational Awareness's highly leveraged portfolio. The fund faced margin calls from lenders, forcing Aschenbrenner to sell most of his publicly traded stocks to Citadel, the hedge fund led by billionaire investor Ken Griffin.