According to sources, Situational Awareness, a hedge fund founded by former OpenAI researcher Leopold Aschenbrenner with approximately $24 billion in assets under management, has liquidated its entire public stock portfolio after suffering significant losses in artificial intelligence (AI) related investments. The fund is now seeking new financial backing.

Reports indicate that the fund sold its entire listed stock portfolio to another large hedge fund through a single transaction. Additionally, Situational Awareness has offloaded a substantial equity stake in AI startup Anthropic, though the buyer's identity has not been disclosed.

Insiders say the recent sharp downturn in the AI sector has severely impacted the fund's performance. Its heavily concentrated positions in AI infrastructure assets have continued to decline, while short positions in software stocks have also incurred losses, delivering a double blow to the fund. Among the holdings, investments in AI hardware such as SK Hynix (SKHY.US) have come under pressure, and short positions in software stocks like Adobe (ADBE.US) have also dragged down overall results.

Sources cited by media outlets report that Situational Awareness is currently in discussions with existing investors and lending institutions to raise new capital. The fund is also offering some investors the opportunity to sell parts of their portfolio holdings to enhance liquidity. Furthermore, it is pitching equity stakes in several private companies, including Anthropic, to potential buyers, though the size of the proposed Anthropic stake sale has not been disclosed.

Insiders reveal that several major brokerages, including Bank of America, Goldman Sachs, and JPMorgan Chase, have been assisting the fund in meeting margin requirements and facilitating an orderly reduction of positions. These institutions initially marketed the fund's long-short portfolio to investors, eventually leading to the bulk sale of its entire listed stock portfolio.

Despite exiting all listed stock investments, Situational Awareness has not ceased operations and continues to hold a portfolio of private company investments. Notably, the fund was previously one of the best-performing hedge funds this year. According to a July 24th investor letter reviewed by the media, the fund's net return reached an impressive 439% through the end of June.

However, Aschenbrenner acknowledged in the letter that the fund "has not been immune to recent market volatility," particularly noting that adjustments in Asian markets have impacted the portfolio. He also stated that this correction has created the most attractive investment opportunities since early 2025 and believes that a future IPO for Anthropic could serve as a significant catalyst for the AI sector, inviting investors to commit additional capital by August 1st.

Multiple sources indicate that Situational Awareness had previously used significant leverage to amplify its AI investment bets. This strategy substantially boosted the fund's returns during the AI bull run but simultaneously magnified losses during the recent rapid correction in the AI sector.

Regulatory filings show that as of the end of the first quarter, Situational Awareness disclosed major holdings including NEBIUS (NBIS.US), SanDisk (SNDK.US), Micron Technology (MU.US), and CoreWeave (CRWV.US), all of which have seen cumulative declines of over 35% this month. Earlier filings also revealed that the fund held Oracle (ORCL.US) and AMD (AMD.US), both of which have also experienced significant declines in the recent AI sector adjustment.

Aschenbrenner left OpenAI in 2024 to found Situational Awareness, building the fund around the core investment thesis that rapid AI development would drive substantial growth in demand for chips, memory, data centers, and power infrastructure. However, with the recent collective downturn in AI-related assets, this highly concentrated investment strategy is now facing a severe test.