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Citadel steps in to salvage Situational Awareness after AI stock losses
Situational Awareness lost 67% of its value in July and was forced to unwind most of its $16 billion public equities book before Citadel bought a chunk by Thursday.
Reuters reports that billionaire Ken Griffin’s Citadel moved to salvage California hedge fund Situational Awareness after the fund suffered heavy losses tied to AI stocks.
According to five people familiar with the matter, Citadel executives investigated the trading book and how liquid the bets were after market rumblings that at least one firm was in trouble. By Wednesday morning, Citadel had reached out to Situational Awareness, and Griffin spoke directly with fund founder Leopold Aschenbrenner, along with Citadel executives including Pablo Salame, Gerald Beeson, Perry Vais, and Shawn Fagan.
The selloff in AI stocks left the Situational Awareness portfolio down 67% in July, prompting the fund to unwind most of its roughly $16 billion public equities book. By Thursday, Citadel had bought a chunk of the book, with Reuters unable to determine how much money Citadel made on the deal.
Aschenbrenner wrote in a letter to investors seen by Reuters that the team “let you down.” One investor familiar with the transaction said only a few firms could absorb that much risk.