Ken Griffin’s Citadel has acquired the majority of the public equity portfolio held by AI-focused hedge fund Situational Awareness, following a sharp reversal in technology stocks that forced the specialist manager to significantly reduce risk, according to a report by Reuters.
The transaction comes after Situational Awareness, founded by former OpenAI researcher Leopold Aschenbrenner, suffered steep losses during July as AI-related stocks sold off, prompting the firm to unwind much of its leveraged public equities portfolio, according to people familiar with the matter.
The fund had reportedly explored raising additional capital before opting to dispose of most of its listed equity holdings. Its portfolio included positions in AI-linked companies such as Broadcom, Intel and CoreWeave.
As part of the agreement, Citadel has taken over the portion of the portfolio financed through prime brokerage leverage. Several leading Wall Street prime brokers, including Goldman Sachs, JPMorgan Chase, Bank of America and Citigroup, are understood to have helped facilitate the transaction.
Despite the sale, Situational Awareness is expected to retain a portfolio valued at approximately $10bn, comprising both remaining public equities and private investments. The fund’s stake in AI company Anthropic was not included in the transaction and remains one of its key holdings.
The reversal marks a dramatic shift for the hedge fund, which had become one of the industry’s standout performers following its launch in 2024. Strong positioning in AI-related companies helped generate returns of roughly 439% during the first six months of 2026, attracting attention from institutional and high-profile technology investors.
However, the sharp correction across AI equities in July erased much of those gains. Reports indicate the fund lost around two-thirds of its value during the month, with Aschenbrenner reportedly attributing part of the decline to aggressive short-selling in the stocks held by the fund.
The transaction also underscores Citadel’s ability to act as a liquidity provider during periods of market stress. With approximately $71bn in assets under management, the multi-strategy hedge fund is one of the world’s largest alternative investment managers and has a long track record of deploying capital opportunistically during episodes of dislocation.
Situational Awareness previously attracted backing from a number of prominent investors, including Jane Street, Stripe co-founders Patrick and John Collison, and technology executives Daniel Gross and Nat Friedman, reflecting strong investor enthusiasm for specialist AI investment strategies before the recent market correction.
