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Hedge funds suffer sharp July losses after AI selloff
Situational Awareness dropped 67% in July and sold most of its public equities to meet margin calls, while an AI-linked hedge fund run by Altimeter fell 11%.
A number of well known hedge funds reported steep losses in July after AI related stocks sold off, with the drawdown revealing how quickly momentum and crowded long bets can unwind, LiveMint Markets reported, citing Bloomberg.
The hedge fund Situational Awareness plunged 67% last month as it offloaded most of its public equities portfolio to meet margin calls, selling at a deep discount to Ken Griffin's Citadel, according to the report. The decline also reflected investor concerns about whether corporate spending on AI is sustainable.
According to research cited in the coverage, a hedge fund index tracking technology, media and telecom stocks fell 10% in July, the most among the firm's benchmarks. The same style of trades had compounded at roughly 25% annually over the previous three years until June, before all three tracked measures plunged steeply in July.
Other results included a 21.7% July drop for Whale Rock Capital Management's flagship tech focused fund and a 11% decline last month for Altimeter Capital Management's AI focused fund. Tiger Global's long short tech fund fell 4.8% in July, while Viking Global, described as having little AI exposure, lost just 0.2% in the month.