Magnetar, the credit-focused hedge fund that rose to prominence during the 2008 financial crisis, has posted one of the industry’s strongest returns this year after a bold wager on AI infrastructure firm CoreWeave delivered outsized gains, according to a report by the Financial Times.
The Illinois-based manager, best known for niche structured credit deals, has generated about 56% in 2025, with much of the performance tied to CoreWeave’s meteoric rise. Regulatory filings show Magnetar controlled roughly 29% of CoreWeave’s class A stock in August, a stake that briefly exceeded $11bn in value.
What began as a $50m loan to the then-crypto mining firm in 2021 has ballooned into a multi-billion equity position after CoreWeave pivoted to AI data centres and listed in March. Shares surged more than 150% in the months following the IPO, turning Magnetar’s initial credit exposure into its single largest portfolio holding.
The windfall has triggered unease among some LPs, who had backed Magnetar for its structured credit expertise rather than venture-style equity exposure. At its peak, CoreWeave represented around half of the firm’s assets under management.
Magnetar has already begun trimming its stake, selling about $149m worth of shares and hedging via put and call options to lock in part of its gains. Still, concerns remain over whether the hedge fund can eventually unwind such a concentrated position without hitting CoreWeave’s stock price.
Despite these worries, Magnetar’s entry point was low enough that even a significant decline in CoreWeave shares would still leave the firm with substantial profits. Its success highlights the growing convergence between hedge funds, private credit, and growth equity as managers seek exposure to the AI trade.
Magnetar, which manages several structured credit funds, has a history of outsized contrarian bets, most famously the “Magnetar trade” on subprime CDOs ahead of the financial crisis.
