Situational Awareness had significantly increased its exposure to semiconductor stocks Micron Technology and Sandisk before last month’s sharp selloff in AI-related equities, according to a report by Bloomberg.
The report cites the latest portfolio disclosures as showing that the highly leveraged hedge fund, founded by former OpenAI researcher Leopold Aschenbrenner, held around $11bn of combined positions in Micron and Sandisk as of 30 June. The two stocks represented roughly a quarter of the fund’s net assets at the time.
Situational Awareness also reduced options positions tied to several of the biggest beneficiaries of the AI boom, including Nvidia, Broadcom and Advanced Micro Devices, during the second quarter.
The portfolio adjustments came shortly before a severe reversal in semiconductor and AI-related stocks. Micron fell about 29% during the July selloff, while Sandisk plunged 47%, putting significant pressure on a fund that had built substantial exposure to the sector.
Situational Awareness had emerged as one of the more aggressive hedge funds betting on the infrastructure underpinning the artificial intelligence boom.
Its sizeable positions in memory-chip makers Micron and Sandisk meant that developments in the semiconductor sector had an outsized impact on the fund’s portfolio.
The sharp decline in July ultimately forced the fund to sell public equities after losses on technology investments accelerated. Citadel, founded by Ken Griffin, subsequently acquired a substantial portion of Situational Awareness’s AI-related stock holdings.
The fund’s second-quarter filings show that it was already making adjustments to its portfolio before the rout, cutting options exposure to Nvidia, Broadcom and AMD while increasing its holdings of Micron and Sandisk.
Those changes, however, did little to shield the portfolio from the subsequent collapse in semiconductor stocks.
