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Rokos and Brevan Howard lose ground as AI stock swings hit hedge funds
In July, hedge funds including Rokos Capital Management and Brevan Howard Asset Management fell about 1.2% each, while Jupiter’s Haidar fund dropped an estimated 3.2% as AI volatility exposed crowded positions.
Rokos Capital Management and Brevan Howard Asset Management were among prominent hedge funds that posted losses in July, as sharp swings in artificial intelligence related stocks disrupted strategies across the industry, according to a report by Bloomberg.
Chris Rokos’ firm fell 1.2% during the month, trimming its gain for the year through July to 8.1%, while Brevan Howard’s Master fund also declined about 1.2%, leaving it up roughly 0.9% for the year. Said Haidar’s Jupiter fund was hit harder, dropping an estimated 3.2% in July and pushing its year to date loss to about 13%.
The turmoil followed a strong first half for hedge funds, then a sudden reversal in AI related equities that exposed crowded positions and created large swings across markets. The selloff was driven in part by concerns about the scale of capital spending tied to the AI boom after Nvidia announced more than $750bn in new AI related deals, along with worries about competitive pressure after an unexpected advance by a Chinese AI developer.
The fallout also extended beyond technology focused managers, Bloomberg reported, as macro firms have become more active in equities and therefore more exposed to sudden stock moves. The collapse of AI focused hedge fund Situational Awareness, which plunged 67% in July and sold most of its public equity holdings to Citadel to meet margin calls, intensified the pressure as results diverged sharply across major firms.