AI hedge fund Situational Awareness sells public portfolio to Citadel, holds onto Anthropic stake

Situational Awareness, the AI-focused hedge fund founded by former OpenAI researcher Leopold Aschenbrenner, has sold the majority of its public stock portfolio to Ken Griffin’s Citadel following steep losses over the past month, the Wall Street Journal reported on Thursday. Despite the selloff, the fund retains a significant stake in Anthropic valued at approximately $5 billion as of this month, according to Bloomberg, an asset that may continue to appreciate ahead of the AI company’s anticipated public listing.

A rapid rise and sharp reversal

Leopold Aschenbrenner, a 25-year-old German-born former OpenAI researcher, launched Situational Awareness in 2024 with no prior trading experience. He gained prominence for his investment thesis that scaling artificial intelligence would require massive infrastructure buildouts in semiconductors, compute, memory, and energy. The fund returned 439% through June of this year, according to the Financial Times, and assets under management reportedly peaked at $45 billion before the downturn.

However, AI infrastructure equities have fallen sharply over the past month as public investors grew concerned that massive capital expenditures were not translating into near-term revenue. Hardest-hit holdings in the fund’s portfolio included memory chip producers SK Hynix and SanDisk, clean energy developer Bloom Energy, and neocloud provider Nebius Group, each declining more than 30% in the last month. The losses were amplified by leverage, a common hedge fund strategy of borrowing money to buy stocks.

Citadel steps in as buyer

Citadel’s purchase of the bulk of Situational Awareness’s public holdings fits a familiar pattern for Ken Griffin’s hedge fund, which has a reputation for acquiring attractive assets when leveraged players are forced to unwind. Citadel already held similar AI infrastructure bets in its own portfolio, suggesting Griffin expects the sector to recover and has the patience to wait it out.

After the sale, Situational Awareness’s overall assets fell to roughly $10 billion, down from around $20 billion in recent months, according to Bloomberg. The fund raised several hundred million dollars at its outset from backers including quant-trading firm Jane Street, Stripe co-founders Patrick and John Collison, and Meta executives Daniel Gross and Nat Friedman.

Why the Anthropic stake matters

Notably, Situational Awareness did not sell its investments in private companies. The most significant of these is its stake in Anthropic, the AI company founded by former OpenAI researchers. Anthropic was last valued at $965 billion in a Series H round in May, and it is expected to go public as soon as October, potentially at an even higher valuation. A windfall from the sale of those shares could offset some of the hedge fund’s public-market losses.

Other private investments in the fund’s portfolio include chipmaker MatX and AI data center startup Fluidstack, which was reportedly in talks in April to raise a new round at an $18 billion valuation.

What this means for the AI investment landscape

The rapid rise and partial unwinding of Situational Awareness underscores the volatility of AI infrastructure bets. While Aschenbrenner’s thesis that AI scaling requires massive compute and energy infrastructure remains broadly accepted, the market is now demanding clearer near-term revenue from these investments. The fund’s experience serves as a case study in how leverage can amplify both gains and losses in a high-conviction, thematic portfolio.

Bitcoin World has reached out to Aschenbrenner for comment.

Conclusion

Situational Awareness has sold its public portfolio to Citadel after steep losses, but retains a valuable private stake in Anthropic. The fund’s trajectory highlights both the potential and the risks of concentrated, leveraged bets on AI infrastructure. The upcoming Anthropic IPO could prove pivotal for the fund’s overall returns.

FAQs

Q1: Why did Situational Awareness sell its public portfolio?
The fund faced steep losses over the past month as AI infrastructure equities declined sharply, and its losses were amplified by leverage. Citadel purchased the bulk of those holdings.

Q2: How much is Situational Awareness’s stake in Anthropic worth?
The stake is valued at approximately $5 billion as of this month, according to Bloomberg. Anthropic was last valued at $965 billion in a Series H round in May and is expected to go public soon.

Q3: Who backed Situational Awareness initially?
Early backers included quant-trading firm Jane Street, Stripe co-founders Patrick and John Collison, and Meta executives Daniel Gross and Nat Friedman.