❯ After Near-Blowup, Situational Awareness Draws New Demand; Fund Declines New Capital

INFLOWAccording to Bloomberg, the AI-themed hedge fund Situational Awareness has seen subscription interest surge after nearly blowing up — but the fund says it is not accepting new capital for now. The founder is former OpenAI researcher Leopold Aschenbrenner. At end-June, the fund was up as much as 439% for the year; a month later, the portfolio had drawn down 67%.

LEVERAGETotal exposure at the time was reportedly around 4x net asset value, and prime brokers Goldman Sachs, JPMorgan, and Bank of America issued margin calls simultaneously. A 30% decline in the long book translates to a near-120% hit to equity at 4x leverage. In the end, Citadel took over the fund’s entire public equity portfolio; its Anthropic stake was not included. Six days before the liquidation, Aschenbrenner wrote to investors inviting them to add capital by August 1 — that money never arrived.

RIGHT CALLThe fund’s directional call on AI is widely seen as correct, but the leverage multiple and holding period did not match the direction. Silicon Valley is now lining up to give him money, a sign that the market is buying the thesis, not the risk controls. The next thing to watch is the total exposure multiple he picks when he reopens — that number will say more about what he learned than any investor letter.

▪ SIGNALA year of 4x gains and a month of 70% losses came from the same book. The market is willing to pay for the former, but the bill is written in the latter’s name.