Citadel's major funds gain in July as AI stock selloff hits rivals

Citadel's major funds rose sharply in July after the firm bought a discounted portfolio of AI-related stocks from Situational Awareness during the hedge fund's collapse, helping offset broader pain across investors exposed to the sector. Wellington gained 5.9% for the month after being up just 0.45% before the deal, and is now up 12% in 2026, already ahead of its 10.2% return for all of 2025. Citadel Equities rose 14.2% in July and Tactical Trading added 11.1%, leaving both near 27% for the year, compared with full-year 2025 returns of 14.5% and 18.6%. Situational Awareness, run by former OpenAI researcher Leopold Aschenbrenner, had peaked near $45 billion in early July before shrinking to about $10 billion within weeks as leveraged bets on AI infrastructure stocks and software shorts unraveled. Its leverage reached as high as four times its capital, and when major chip and memory holdings fell more than 35% during the month, Goldman Sachs, JPMorgan Chase and Bank of America demanded more collateral. The fund could not meet those margin calls and sold its entire public equity book, which Citadel bought at roughly a 10% discount. The rebound that followed helped Citadel book gains, while some rivals moved the other way. Whale Rock's flagship fund fell 21.7% in July, erasing roughly half of its 2026 gains. Aschenbrenner, 25, had returned 439% through June and more than 1,000% since launching in July 2024. The fund still holds private investments, including an Anthropic stake worth about $5 billion. Citadel has not sold the stocks it bought, leaving August earnings from the same AI names as the next test of whether the discount will hold its value.