Ken Griffin’s Citadel has acquired the bulk of Situational Awareness’s public equity portfolio after the AI-focused hedge fund suffered severe losses during a sharp sell-off in artificial intelligence stocks throughout July.

Situational Awareness was founded in 2024 by Leopold Aschenbrenner, a former OpenAI researcher who generated considerable attention on Wall Street after the fund delivered a 439% return between January and the end of June. Backers included Jane Street, Stripe co-founders Patrick and John Collison and Meta executives Daniel Gross and Nat Friedman. At its peak, the fund managed around $20 billion in assets.

The reversal came quickly. The Wall Street Journal reported the fund fell approximately 67% in July alone as AI-related equities tumbled and short sellers targeted its largest positions. Facing pressure to either raise fresh capital or cut market exposure, Situational opted to offload the majority of its listed holdings.

The disposed portfolio included prominent AI-era beneficiaries such as Broadcom, Intel and CoreWeave, all of which have experienced considerable volatility as investors recalibrated expectations around sector valuations. Citadel’s acquisition covered specifically the portion of the portfolio financed through borrowing from prime brokers, with Goldman Sachs, JPMorgan Chase, Bank of America and Citigroup among the institutions facilitating the deal.

Despite the scale of the sale, Situational is reported to be continuing operations with a portfolio of roughly $10 billion spanning listed securities and private investments. Its stake in AI start-up Anthropic remains intact.

For Citadel, which manages approximately $71 billion in assets, the move is characteristic of how well-capitalised multi-strategy funds deploy capital during periods of market stress – acquiring quality positions at reduced prices when competitors are forced to sell.

The deal arrives against a backdrop of broader turbulence across the hedge fund industry. Goldman Sachs data showed Asia-focused long-short funds had lost an average of 18.6% through 28th July, while Morgan Stanley reported widespread unwinding of AI-related positions across the sector. Heavy leverage, which amplifies gains in rising markets, proved costly when falling prices triggered a cycle of forced selling that deepened the downturn.

Neither Citadel nor Situational Awareness offered public comment on the transaction.