Leopold Aschenbrenner’s hedge fund, Situational Awareness, suffered a 67% drop in July following a failed leveraged bet on AI infrastructure stocks. The fund, which grew to $13.7 billion, was forced to liquidate core holdings like Nebius and SK Hynix after margin calls triggered a fire sale of assets. Investors now face uncertainty as the fund’s remaining value is tied heavily to a private stake in Anthropic.
Situational Awareness, a high-growth hedge fund founded by Leopold Aschenbrenner, reported a sharp 67% decline in value during July. This sudden drop marks a dramatic reversal for the fund, which had previously captured market attention with reported returns of 439% in the first half of 2026. The fund's rapid expansion to $13.7 billion in assets was built on an aggressive, concentrated strategy focused heavily on the artificial intelligence sector.
Impact of Leverage on Portfolio Stability
The fund’s strategy relied on significant use of borrowed money, or leverage, which reached as high as 400% according to reports. While this approach amplified gains during the initial AI market run-up, it proved catastrophic when sector sentiment shifted in July. The fund held large positions in companies such as Nebius, SanDisk, SK Hynix, Nvidia, Bloom Energy, and CoreWeave. When prices for these stocks retreated—with Nebius falling approximately 48% and SanDisk declining 56%—the high leverage levels forced the fund to meet margin calls from lenders.
To settle these obligations, the fund was compelled to execute a rapid liquidation of its public stock holdings. These assets, including significant positions in SK Hynix and CoreWeave, were reportedly sold at a steep discount to Citadel, an investment firm led by Kenneth Griffin. This emergency sale locked in heavy losses for the fund and contributed to the 67% decline in total value within a single month.
Concentration and Future Outlook
Financial data indicates that the fund’s portfolio was heavily concentrated, with the Information Technology sector accounting for over 54% of its holdings by the end of 2025. This lack of diversification left the fund vulnerable to sector-specific downturns. Following the liquidation of its public equities, the primary remaining asset for the fund is an approximately $5 billion stake in the private AI company Anthropic. Because this holding is not publicly traded, its liquidity and immediate value are more difficult for investors to assess compared to the sold public stocks.
For investors observing this situation, the primary monitorable is the valuation and future liquidity of the Anthropic stake. The events of July highlight the risks associated with high leverage and portfolio concentration, particularly in fast-moving sectors where stock prices can experience high volatility. The fund’s ability to recover or manage its remaining private assets will depend on future developments within the AI infrastructure market and the ability to realize value from its concentrated position in Anthropic.