Leopold Aschenbrenner’s AI-focused hedge fund was forced to unwind leveraged public equity bets after margin calls from Bank of America, Goldman Sachs and JPMorgan.
Situational Awareness, the hedge fund run by former OpenAI researcher Leopold Aschenbrenner, lost roughly 67% of its value in July after a downturn in AI infrastructure stocks hit its leveraged portfolio. The drawdown forced the fund to sell most of its public equity holdings to Citadel for approximately $16 billion at a discount of around 10% to meet margin calls from its prime brokers, Bank of America, Goldman Sachs and JPMorgan. The fund had posted a 439% return through June 2026 on concentrated long positions in AI hardware and semiconductor stocks including SK Hynix, Nebius and Micron, lifting assets under management to roughly $45 billion by early July. The liquidation was completed by July 30. Despite the selloff, the fund’s remaining portfolio is valued at about $10 billion and it is still up around 80% this year, supported largely by private holdings including a stake in Anthropic. The episode underscores how leverage (borrowed money used to amplify bets) can magnify gains but also accelerate losses when a crowded sector turns and hedges fail to offset the move.