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Jane Street posts about $15 billion losses in July after AI hedge fund slump
The losses came as Jane Street prepared to issue $14.6 billion of bonds to refinance its debt, after Situational Awareness faced margin calls tied to AI bets.
Jane Street posted roughly $15 billion of losses in July, its first monthly slump in about a decade, as the AI-focused hedge fund Situational Awareness deteriorated and dragged down asset prices across equity markets, according to a person familiar with the matter cited by LiveMint Markets.
The firm’s losses were linked to its investment in Situational Awareness, along with wrong-way bets in Asian equity markets, the person said. Turner Batty, a Jane Street partner, said in an internal note that July was a bad month.
Despite the downturn, Jane Street has generated more than $40 billion of net trading revenue so far this year, and it plans to be more selective about risk following the recency of the losses. Batty said the firm has closed a significant portion of the risk in areas it lost on during July and reduced risk-taking in other strategies.
The market maker was also dealing with the fallout as it sought to refinance billions of dollars of debt, with Financial Times earlier reporting that Jane Street would issue $14.6 billion of bonds this week to overhaul its debt load. LiveMint Markets also reported that Situational Awareness faced margin calls after its AI bets soured and struck a deal with Citadel to offload a large chunk of its public equity book.