Situational Awareness Fund Loses 67% in July, Margin Calls Triggered by Goldman, Morgan and Other Banks
Leopold Aschenbrenner's Situational Awareness Fund recorded a net loss of approximately 67% in July, but remains up about 80% for the year.
The market cooled rapidly in mid-July, leading to a decline in holdings that triggered margin calls from banks like Goldman and Morgan. Other hedge funds intensified short selling, creating a cycle of "decline → margin call → forced selling." Aschenbrenner negotiated overnight during a wedding in Carmel, initially agreeing to sell about $3.5 billion in Anthropic equity to a consortium led by Greenoaks and Sequoia, but later opted to sell public stocks instead. Citadel purchased most of the public equity portfolio at a discount of over 10% below market value, allowing the fund to meet margin calls without officially defaulting, and related AI and semiconductor stocks subsequently rebounded.
Leverage magnified losses amid volatility, with funds shifting from high-leverage public stocks to unleveraged operations while retaining private equity; the event-driven nature was due to margin pressure, benefiting Citadel, which bought at a discount, while fund investors and high-leverage strategies faced pressure.
Source: Public Information
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Leopold Aschenbrenner gained fame with a lengthy piece titled "Situational Awareness," transitioning from an OpenAI researcher to founding a fund that heavily invested in AI infrastructure, recording over 1000% returns in the first half of 2025 to 2026, rapidly expanding to several billion dollars, and introducing bank leverage to amplify exposure; his private holdings include early AI companies like Anthropic, forming a mixed portfolio of public and private investments.
The funding path shifted from high-leverage public markets to urgent deleveraging, motivated by the desire to avoid formal default and retain high-valued private assets; this mirrors historical cases like Long-Term Capital Management, which was forced to liquidate due to leverage and liquidity crises, or Archegos, which collapsed due to a chain reaction from margin calls, with Citadel completing asset transfers at a discount.
This event resembles the bank and hedge fund buyout model following the 2021 Archegos collapse, and is close to the collective deleveraging of AI-themed funds as narratives fade; the current fund is transitioning from leverage expansion to risk contraction, significantly reducing public portfolios while private equity remains the main residual asset.
Essentially, this reflects capital concentration and the transfer of pricing power: high leverage triggers forced selling during liquidity contractions, with order flow and discounted assets concentrating in larger hedge funds with stronger balance sheets, accelerating the industry's shift from narrative-driven to risk-constrained reconstruction.
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