Citadel liquidated over $4 billion in stock positions from Leopold Aschenbrenner’s AI-focused hedge fund Situational Awareness, representing more than 80% of the fund’s original portfolio, according to a letter to investors seen by Reuters.
The transactions, executed last month, followed a sharp selloff in AI-related stocks that erased 67% of Situational Awareness’ value in July. The fund was forced to unwind a $16 billion public equities book, prompting Citadel to step in and absorb the positions. Citadel executed nearly 100 block trades to shed the risk, with Griffin noting that trades in 10 names represented the largest intraday block trades of the year.
Ken Griffin, founder of Citadel, highlighted the firm’s ability to rapidly assess and distribute risk in a Friday letter to investors. ‘Our ability to distribute this risk was central to our investment thesis,’ Griffin wrote. ‘These moments highlight our ability to quickly evaluate complex risks, deploy capital with speed and conviction, and execute with precision.’
Griffin also emphasized the role of trading and prime brokerage teams at major banks in facilitating the transaction. ‘A transaction of this magnitude could not have been completed without the extraordinary cooperation of the trading and prime brokerage teams at the banks serving both firms,’ he stated. Citadel declined to comment further to Reuters.
The moves coincided with a 5.94% gain for Citadel Wellington in July, lifting its year-to-date performance to 12%. Situational Awareness’ losses in July underscored the volatility in AI-driven equities, which had driven the fund’s rapid expansion before the correction. Citadel manages approximately $77 billion in assets under management.
