I am not by any means an expert at finance but I think I do now have some advice for people who are: Do not name your hedge fund anything that will be hilarious if it blows up. Don’t use a name like “Long-Term Capital Management” or “Amaranth Advisors” (named for the floral symbol for immortality). Certainly do not call yourself “Situational Awareness,” which might as well just be “Hubris, Inc.”
The loss of Situational Awareness
This 24-year-old first-time hedge funder screwed up his AI fund with one weird trick.
The loss of Situational Awareness
This 24-year-old first-time hedge funder screwed up his AI fund with one weird trick.
Anyway, Situational Awareness, the hedge fund started by a 24-year-old former OpenAI employee that focuses on artificial intelligence bets, has sold most or all, depending on who’sreporting, of its entire public stock portfolio to Ken Griffin’s Citadel after several bad weeks for AI stocks, and that’s the situation we are all now aware of. You may recall earlier this week I noted the market had gotten particularly nervous about AI risk; as it turns out, we have discovered one firm that was swimming without a bathing suit.
How bad is it? Well, according to CNBC, the fund was worth 45billionatthestartofJuly](https://www.cnbc.com/2026/07/30/leopold−aschenbrenners−hedge−fund−is−facing−steep−ai−losses.html).Itis[nowworth10 billion, after the sale of assets to Griffin. The previous record holder on all-time trading losses was Archegos Capital Management, which lost [8billionin10days](https://www.wsj.com/finance/investing/inside−archegoss−epic−meltdown−11617323530)in2021,accordingtoTheWallStreetJournal.Ifthesenumbershold,SituationalAwareness’AIbetslostthreetimesasmuch.Everydetailofthisdisasterisfunnierthanthelast.SituationalAwarenesshadastaffofeight,ofwhomfourwereinvestmentprofessionals.“Thefund’slargestholdingsattheendofthefirstquarterincludedNebiusGroup,Sandisk,MicronandCoreWeave,accordingtofilings,”CNBCwrote.“Allfourofthosestocksaredownmorethan35percentthismonth.”Iexpectwewillhearmoreinthecomingdays,especiallyfromtheWallStreetprofessionalswhowereontheothersideofthesejokers’trades.“Basically,thisinvestmentfirmwillbekindoflikeabraintrustonAI.”Howdidwegethere?SituationalAwarenessLPwasnamedfor[aseriesoffacileessays](https://situational−awareness.ai/)aboutmachineintelligencepublishedbytheimprobablynamedLeopoldAschenbrenner,the24−year−oldmastermindofthehedgefund.“Wearebuildingmachinesthatcanthinkandreason,”hewrites,betrayingthathehasnoideawhatthinkingcouldpossiblymean.“By2025/26,thesemachineswilloutpacemanycollegegraduates.Bytheendofthedecade,theywillbesmarterthanyouorI;wewillhavesuperintelligence,inthetruesenseoftheword.Alongtheway,nationalsecurityforcesnotseeninhalfacenturywillbeunleashed,andbeforelong,TheProjectwillbeon.Ifwe’relucky,we’llbeinanall−outracewiththeCCP;ifwe’reunlucky,anall−outwar.”Thereisapartofmethatwantstogolinebylinetodunkoneveryclaimhere,beginningwiththeveryfirstsentence,“YoucanseethefuturefirstinSanFrancisco,”butIamgoingtostifletheimpulse.Theessaysarethetheoreticalunderpinningsofthehedgefund.Theupshotisthatartificialgeneralintelligenceisreal(lol)andwillarrivein2027(lmao).SotheentirepointofthehedgefundwastodumpasmuchmoneyaspossibleintoAIstocksandthengetvery,veryrich.“Basically,thisinvestmentfirmwillbekindoflikeabraintrustonAI,”[AschenbrennertoldDwarkeshPatelinafour−hourpodcastinterview](https://www.dwarkesh.com/p/leopold−aschenbrenner),thepreferredintellectualmediumoftheSiliconValleyelite.“We’regoingtohavewaymoresituationalawarenessthananyofthepeoplewhomanagemoneyinNewYork.We’redefinitelygoingtodogreatoninvesting,butit’sthesamesortofsituationalawarenessthatisgoingtobeimportantforunderstandingwhat’shappening,beingavoiceofreasonpublicly,andbeingabletobeinapositiontoadvise.”Ireallycannotbegintoexplainhowmuch[thisessay’sbadgraphs](https://maxread.substack.com/p/who−is−leopold−aschenbrenner)impressedACertainKindofSiliconValleyGuy.Axioswrotebreathlesslyabouttheessaythat“[hisopusisauseful,eye−openingsynthesisofhigh−levelSiliconValleyconversations.](https://www.axios.com/2024/06/23/leopold−aschenbrenner−ai−future−silicon−valley)”Aschenbrenner’sinsights“[expandedmyperspectiveasanAIpractitionerbeyondjustthetechnicalaspects](https://shav.dev/blog/situational−awareness),”wroteShavVimalendiran,acofounderofSAMMYLabs,[anAIcompanythatismeanttosimplifylegalstatutes](https://www.sammylabs.com/).Youknowwhoelselikedit?[IvankaTrump](https://x.com/IvankaTrump/status/1839002887600370145?lang=en),whocalledit“anexcellentandimportantread.”Whywouldthesepurportedlyseriouspeoplebuyinona24−year−old’sveryfirsthedgefund?[SituationalAwareness’backers](https://maxread.substack.com/p/who−is−leopold−aschenbrenner)includedPatrickandJohnCollison,whocofoundedStripe,andtwoMetaAIleaders,DanielGrossandNatFriedman.Thefund’sdirectorofresearchwasCarlShulman,who’dworkedatPeterThiel’sClariumCapital.Eventually,[JaneStreet](https://www.nytimes.com/2023/02/21/business/bankman−fried−altruism−jane−street.html)—theWallStreetfirmbuddingyoungEffectiveAltruists,includingSamBankman−Fried,join—boughtintoo.“JaneStreet’sinvestmentinSituationalAwarenessisparticularlynotablebecausethefirmrarelyallocatescapitaltooutsidemoneymanagers,”[TheWallStreetJournalwroteinJune.](https://www.wsj.com/finance/stocks/the−24−year−old−ai−wiz−who−counts−jane−street−as−an−investor−1c30d751)Whywouldthesepurportedlyseriouspeoplebuyinona24−year−old’sveryfirsthedgefund?MybestguessisthatAschenbrenner’sinvestorswererelyingonthesocialbonafideshehadcultivated.Socialproofisthelaziestandmostdisastrouswaytovetpeople—askanyTheranosinvestor,orforthatmatter,anyonewhohadBernieMadoffmanagingtheirmoney—butIsupposeit’sgoodenoughforSiliconValley.Atage17,Aschenbrennerwascalled“aneconomicsprodigy”byTylerCowen,alibertarianeconomistfamousincertainSiliconValleycircles.Cowen’sEmergentVenturesevengavehimagrant,accordingtoFortune.Aschenbrennerpublishedessaysin[WorksinProgress](https://worksinprogress.co/issue/securing−posterity/),apublicationfundedbyStripe.DuringhistimeatColumbiaUniversity,Aschenbrennercofoundedthecollege’sEffectiveAltruismchapter.Aftergraduatingin2021as[ColumbiaUniversity’svaledictorianatage19](https://www.college.columbia.edu/cct/latest/take−five/valedictorian−special−times−college),Aschenbrennerwentontoworkatthe[FTXFutureFund](https://ftxfuturefund.org.cach3.com/index.htmlFromthere,heimmediatelygotajobonOpenAI’ssuperalignmentteam.Fortunequotesseveralformercoworkerswhodescribehimasbeing“politicallyclumsy,”arrogant,andabrasive.“Multipleresearchersalsodescribedaholidaypartywhere,inacasualgroupdiscussion,AschenbrennertoldthenScaleAICEOAlexandrWanghowmanyGPUsOpenAIhad—‘juststraightoutintheopen,’asoneputit,”wrote[Fortune’sSharonGoldmaninherprofile](https://fortune.com/2025/10/08/leopold−aschenbrenner−openai−ftx−1−5−billion−hedge−fund−situational−awareness/).(BothWangandAschenbrennerdenythisoccurred.)AschenbrennerwaslaterfiredfromOpenAIforleakinginternalinformationinanincidentunrelatedtotheScaleAIthing.Twomonthsafterthat,AschenbrennerpublishedSituationalAwareness,hisessays.“Obviously,notblowingupistasknumberoneandtwo.”NowastutereadersmaynoticethatAschenbrennerhadnopreviousmoneymanagementexperienceonhisresumewhenhelaunchedhishedgefund.TheymayalsonoticethatthesumtotalofAschenbrenner’sworkexperiencewasafewmonthsatFTXandaboutayearatOpenAI.TheymaywonderifthismeansthattheCollisons,Gross,andFriedmanhavetoomuchmoneytoburniftheyarefundingthislittleshit.(Yes,obviously.[Taxtherich](https://itep.org/expert−report−on−the−california−2026−billionaire−tax−revenue−economic−and−constitutional−analysis/)!)Here’showAschenbrennerdescribedthefund’sstrategybackinthehalcyondaysof2024:“Obviously,notblowingupistasknumberoneandtwo,”hetoldPatel.“Youhavetogetthetimingright.ThesequenceofbetsonthewaytoAGIisactuallyprettycritical.Peopleunderrateit.”We’llgetamorecompletepictureofhowSituationalAwarenesscrashedandburnedinthecomingdays,butrightnowitlookslikethis.Hedgefundsoftenborrowmoneytomaximizetheirbets.SoifyoureallybelieveAIisthefuture,“youwon’tput100Thesameborrowingthatmagnifiesyourwinsalsomagnifiesyourlosses.IfyouhaveborrowedmoneytobetonAIstocks,andthosestocksgodown—astheyhavedonerecently—thepeopleyouborrowedfromwilldowhat’scalleda“margincall”andaskyoutotopupyourloancollateral.First,SituationalAwareness[heldcallswithitsinvestorsandlenderstoraisemorecapital](https://www.ft.com/content/280336bf−dbed−405f−b38e−5af644a21549?syn−25a6b1a6=1),TheFinancialTimesreportedyesterday.Itevenofferedsomeinvestorstheopportunitytobuypartsofitsportfolio.Thismorning,SituationalAwarenesssoldwhattheFTsaidwas“alargeportionofits16bn public equity” to Citadel, Griffin’s hedge fund.
“You’ve got to be really, really careful about your overall risk positioning.”
Public equity is the most liquid part of anyone’s portfolio. Situational Awareness still has private holdings, including $5 billion in Anthropic, the FT reported. According to CNBC, Situational Awareness was also negotiating to sell that stake, “but it wasn’t clear if that deal was done.”
“You’ve got to be really, really careful about your overall risk positioning,” Aschenbrenner said in 2024. “If you expect these crazy events to play out, there’s going to be crazy things you didn’t foresee.” One of those things, perhaps, is that artificial general intelligence isn’t coming — or at least, not by 2027. “A friend joked that the investment firm is perfectly hedged for me,” Aschenbrenner said. “Either AGI happens this decade and my human capital depreciates, but I turn it into financial capital, or no AGI happens and the firm doesn’t do well, but I’m still in my twenties and smart.”
Yes, Aschenbrenner is certainly in his 20s!
