Citadel reportedly bought the bulk of Leopold Aschenbrenner’s Situational Awareness public book on July 30 after margin pressure hit a levered AI trade that had surged from launch but then saw 40-50% monthly drawdowns in its infrastructure names. The portfolio was a concentrated bet on AI’s physical layer — power, memory, compute, data-center buildout, and connectivity — paired with heavy put exposure against the big chip and infrastructure names. The second half argues the trade was never about the companies themselves but about leverage: larger firms with time and capital can buy distressed books cheaply, while levered funds get forced out. The close pivots to a sponsored KSCP pitch: a subscription security stack combining robots, towers, software, monitoring, and guarding, with preliminary Q2 revenue at a company record, up more than 200%.
Citadel reportedly bought the bulk of Situational Awareness’ public stock portfolio after heavy losses and margin pressure from prime brokers on leveraged holdings; the deal broke on July 30.
Situational Awareness launched at the end of 2024, was named after Leopold Aschenbrenner’s viral AI white paper, and its thesis was that AI needs power, memory, data centers, and cooling more than just chips.
The fund was reported up over 1,000% since launch, but an FT investor letter six days ago said it was up about 439% net in the first half of this year alone.
FT and CNBC’s David Faber put the leverage as high as 4:1, while filings showed the top five disclosed positions made up over three quarters of the long book.
In July, the Semiconductor Index fell roughly 28% from its June high, the Kospi was down about a third, and individual portfolio names were down 27% to 55% on the month.
CNBC said Bank of America, Goldman Sachs, and JP Morgan were working with the fund to satisfy margin requirements or cut positions in an orderly way, but it could not be determined whether those sales actually met the margin calls.
The likely bulk purchase included BE, SNDK, CRWV, IREN, CORZ, APLD, Riot, CleanSpark, Bit Deer, Hive, Solaris Energy, T1 Energy, Babcock & Wilcox, ProPetro, and White Fiber.
BE was the single biggest disclosed long at almost a quarter of the long book, and it makes solid oxide fuel cells for on-site power that can bypass years-long utility interconnection queues.
SNDK was about 19% of the disclosed book, is memory and storage/NAND flash, and was down more than 55% over the past month.
CRWV was around 14% of the portfolio and rents out Nvidia compute after buying chips at scale, making it a direct public proxy for AI compute demand.
IREN and CORZ were roughly 10% each; both are former Bitcoin miners that shifted power infrastructure into high-performance computing for AI workloads, and as of March 31 the fund held 8.2% of CORZ’s total shares outstanding.
APLD was about 8%, with Riot, CleanSpark, Bit Deer, and Hive also listed among the miner-to-data-center names in the book.
Bloomberg added that the fund held SK Hynix and NVDA; the NVDA position was reportedly built after the March filing date, and NVDA was down more than 46% over the past month.
The portfolio also carried roughly $2.04 billion of SMH puts, $1.57 billion of NVDA puts, over $1 billion of ORCL puts, about $1 billion of AVGO puts, nearly $1 billion of AMD puts, plus puts on TSM, MU, and INTC; put exposure was about 62% of fund value.
Bloomberg and Business Insider said Millennium and Jane Street reviewed the same portfolio and passed before Citadel bought it, implying Citadel likely got a deeper discount and better leverage terms.
Citadel’s playbook is to buy distressed books and wait; the notes cite prior cases in Amaranth in 2006 and SOHU in 2007, and say the same securities at the same prices became a liquidation problem only because of leverage and financing.
The notes frame the broader lesson as volatility being exploitable by big, patient capital: weak hands buy high and sell low, while powerful firms can absorb drawdowns, scoop distressed positions, and profit when others buy back in.
The sponsored segment was KSCP: a Silicon Valley security tech company selling autonomous patrol robots, blue-light towers, software, and licensed security agents as a single monitored subscription security service, with preliminary Q2 revenue at a company record and up more than 200%.
KSCP’s K5 is a fifth-generation self-driving outdoor patrol robot with 360° HD cameras, thermal imaging, 6 lidar sensors, 13 sonar sensors, automatic license plate recognition, a two-way intercom, and self-docking recharge; the K1 Hemisphere, K1 towers, and K7 broaden coverage into stationary posts, emergency communication, and tougher industrial sites.
KSCP says its Security Operations Center and 24/7 remote monitoring tie the system together, while the company remains a micro cap with dilution risk, profitability and integration still ahead, and capital-intensive growth flagged in SEC filings.