Citadel buys AI fund's public holdings after July loss

A major hedge fund specializing in artificial intelligence investments has been forced to sell the bulk of its public stock holdings following steep losses during a sharp market downturn in July. Ken Griffin's Citadel has acquired the public equity portfolio of Situational Awareness, a fund founded by former OpenAI researcher Leopold Aschenbrenner, in a transaction that underscores the heightened risks of leveraged bets in the volatile AI sector.

The deal, finalized by July 30, marks a dramatic reversal for a fund that had been one of Wall Street's top performers. Situational Awareness reported a staggering 439% return for the first half of 2026, attracting billions in assets and backing from prominent technology figures. However, a severe selloff in AI-related stocks throughout July triggered heavy losses. The fund's concentrated positions in companies like Broadcom, Intel, CoreWeave, and SanDisk suffered steep declines, with some falling more than 50% from recent peaks.

Faced with mounting losses and pressure from prime brokers to post additional collateral, the fund was compelled to raise capital or reduce exposure. After negotiations, it agreed to sell most of its publicly...