AI Losses Trigger Margin Call as Situational Sells Most of Stock Portfolio to Citadel

Situational Awareness, the hedge fund known for AI-themed investing, sold most of its stock portfolio to Citadel after suffering heavy losses, The Wall Street Journal reported on July 30.

Founded by former OpenAI researcher Leopold Aschenbrenner, Situational drew strong interest from retail investors for its early investments in AI-related companies including Anthropic.

The fund built its reputation on strong returns from early bets on global stocks poised to benefit from advances in AI, including semiconductor, infrastructure and power companies, as well as AI startups.

Fueled by the rally in AI-related shares, Situational's assets under management topped $20 billion a little more than two years after its launch.

The fund also participated as a major investor earlier in July ahead of the Nasdaq listing of SK Hynix's American depositary receipts.

The Financial Times previously reported that Situational, along with Baillie Gifford and Coatue Management, had expressed interest in investing as much as $7 billion in the SK Hynix ADR initial public offering.

More recently, however, the sharp selloff in AI-related shares left the fund facing a margin call, the Journal reported.

Its listed stock investments included SK Hynix, SanDisk, Bloom Energy and Nebius, according to the Journal.

People familiar with the matter said Citadel acquired only the debt-financed assets in Situational's listed equity portfolio. Assets financed with investor capital remain with Situational.

German-born Aschenbrenner quickly emerged as an influencer in the AI field after publishing an essay in 2024 on the promise and risks of artificial intelligence. He used that prominence to found Situational, a hedge fund based in San Francisco, later that year.

Go Jeong-sam, Hankyung.com reporter, jsk@hankyung.com