Situational Awareness, an AI-focused hedge fund created by former OpenAI researcher Leopold Aschenbrenner, recently sold most of its public stock holdings to Citadel following significant losses in AI infrastructure investments. The fund, which had grown to as much as $45 billion in assets under management during its peak, faced steep declines amplified by leverage. Aschenbrenner, a 25-year-old who had quickly gained fame for his sharp insights on AI scaling and infrastructure, launched the fund in 2024 after departing OpenAI under controversial circumstances.

Despite the fund’s impressive 439% return through June 2026, recent market shifts led to a collapse in key public equities like memory chip makers SK Hynix and Sandisk, as well as clean energy developer Bloom Energy and cloud provider Nebius Group. These stocks dropped sharply amid skepticism about near-term revenue generation from heavy AI infrastructure expenditures. While Aschenbrenner urged investors in late July to view the selloff as a buying opportunity and encouraged new capital commitments, these appeals fell short of expectations.

Citadel’s acquisition of Situational Awareness’ public portfolio aligns with its strategy of snapping up distressed assets from leveraged investors, especially in the AI sector where it has made similar bets. The sale reduced Situational Awareness' assets to approximately $10 billion from roughly $20 billion in recent months. However, the fund retained its private investments, including a substantial $5 billion stake in Anthropic, which has shown steady valuation growth and is preparing for a potential IPO by October 2026.

In addition to Anthropic, Situational Awareness holds positions in private companies like chipmaker MatX and AI data center startup Fluidstack, both notable players in the AI infrastructure ecosystem. The value and prospects of these private holdings offer a significant cushion that could help offset the fund’s public market losses. As Aschenbrenner navigates this challenging period, the fund’s private assets remain a key part of its strategy moving forward.