Lack of situational awareness? Leopold Aschenbrenner's fund bet the house on Micron and Sandisk before a pullback.
Once dubbed the "AI stock god," Leopold Aschenbrenner's star has fallen since the near-collapse of the hedge fund Situational Awareness.
Quarterly filings made by the Situational Awareness fund reveal that, at the end of June, just before a major correction in chip stocks, Sandisk $(SNDK)$ and Micron $(MU)$ made up more than half of Leopold Aschenbrenner's portfolio.
By July 30, when the fund was forced to negotiate a bailout deal with Citadel, shares in the two semiconductor plays had plunged. Sandisk had collapsed 43%; Micron, 24%.
The next largest portfolio holding, accounting for almost 10% of the fund, was Bloom Energy $(BE)$, which provides energy solutions primarily for data centers. Bloom saw its share price plummet 31% over the same four weeks.
Completing the quintet of top Situational Awareness exposures were 6% weightings in Taiwan Semiconductor Manufacturing Co. $(TSM)$ and cloud provider Nebius (NBIS), which fell 15% and 31%, respectively.
The disclosures were included in the mandatory end-of-quarter 13F filings provided by the San Francisco-headquartered fund, and the heavy concentration in just two companies representing closely related sectors raises uncomfortable questions about risk-management practices. The fund's positioning became, in effect, one big bet on the AI trade, and in July the wheels came off that bandwagon.
Before the humiliating collapse, Aschenbrenner's fund had shown phenomenal returns of more than 1,000% since its inception in 2024. He articulated very clearly his confidence in the AI boom and amplified returns by using leverage. Once the bonanza in AI-related stocks began to falter in July, that approach worked against him.
The rapid demise of the fund's turbocharged returns was also partly explained by the 13F filings, which are required within 45 days of the end of the quarter by the Securities and Exchange Commission. It appears as though bearish bets taken out as insurance protection for the portfolio had been eliminated with put options on the likes of Nvidia (NVDA), Oracle $(ORCL)$, Broadcom $(AVGO)$ and Advanced Micro Devices $(AMD)$ closed out before the end of June.
The rescue package negotiated with Ken Griffin's Citadel saw Aschenbrenner unwind most of his public equity positions but allowed him to keep the privately held assets, in particular a stake in AI lab Anthropic that has been estimated at around $5 billion.
Aschenbrenner's investors were not the only casualty of July's volatility. The Wall Street Journal published a report last week detailing how proprietary trading giant Jane Street lost $15 billion that month, as it had become a significant investor in Situational Awareness LP.
-Jules Rimmer