「AI Stock God」 Leopold: The fund will continue to operate and will not exit the public stock market, taking a lesson from this loss

July 31st, according to the Financial Times, AI hedge fund Situational Awareness's founder Leopold Aschenbrenner stated in a letter to investors that the fund's assets shrunk by 67% in July. He took "full responsibility" for the event that led to this loss and will ensure the team learns from these "very costly scars."

Situational Awareness was founded in 2024 and, riding the AI trend, saw its assets surge to over $20 billion at one point. This week, AI stock selloffs heavily impacted the fund's major holdings in companies like Bloom Energy and SanDisk. Aschenbrenner likened the fund's situation to a "bank run" and mentioned that the market engaged in unfavorable trading of public stocks associated with the fund.

The fund reached an emergency exit deal with Citadel on Wednesday, selling a significant portion of its public stock holdings at a discount, with specific terms undisclosed. Aschenbrenner stated that the fund will continue to operate and stay in the public stock market but will no longer leverage bets through bank borrowings. Despite the significant losses in July, the fund is still up 80% year-to-date.

Aschenbrenner said, "Our fund must always maintain such a structure that can withstand a loss and continue the fight." The investor letter did not disclose the fund's latest AUM, and many early investors are restricted by lock-up agreements, unable to redeem funds until at least September.