Citadel has acquired most of the publicly traded holdings of Situational Awareness after the AI-focused hedge fund suffered a 67% July loss and was forced to unwind leveraged positions.

The sale transfers a multibillion-dollar portfolio of semiconductor, data-center, memory and energy stocks to Ken Griffin’s firm after falling share prices left Situational Awareness unable to continue financing its bets.

Founded by former OpenAI researcher Leopold Aschenbrenner, the fund became one of Wall Street’s fastest-growing investment firms by betting that artificial intelligence would require far more computing power, electricity and digital infrastructure than markets expected.

Those positions produced a reported 439% gain during the first half of 2026. The same concentrated strategy unraveled in July as several AI-linked holdings fell sharply and borrowed money magnified the damage.

Citadel purchased most of the public stocks financed with leverage. The price and exact size of the transaction were not disclosed.

Situational Awareness is expected to retain about $10 billion in assets, largely through private investments that were not included in the sale. Among them is its stake in Anthropic, preserving exposure to one of the largest privately held AI developers.

The transaction gives Citadel control of assets sold under financial pressure rather than through a planned exit, positioning the firm to benefit if AI infrastructure stocks recover.

Aschenbrenner has told investors that Situational Awareness intends to continue operating with a revised strategy and less dependence on borrowed money. Despite July’s collapse, the fund reportedly remained up approximately 80% for the year because of its earlier gains.

The sale shows how leverage can turn a temporary market decline into a permanent loss of ownership. Situational Awareness may have been right about AI’s long-term growth, but it could no longer afford to wait.

JBizNews Desk | Wall Street

© JBizNews.com All Rights Reserved.
Reproduction or distribution without written permission is prohibited.