{"id":2870,"date":"2026-07-31T04:08:04","date_gmt":"2026-07-31T04:08:04","guid":{"rendered":"https:\/\/americanhomejournals.com\/?p=2870"},"modified":"2026-07-31T04:08:04","modified_gmt":"2026-07-31T04:08:04","slug":"what-smart-people-are-saying-about-the-situational-awareness-stock-sell-off-to-citadel","status":"publish","type":"post","link":"https:\/\/americanhomejournals.com\/?p=2870","title":{"rendered":"What smart people are saying about the Situational Awareness stock sell-off to Citadel"},"content":{"rendered":"
\n

People can’t stop talking about the situation at Situational Awareness.<\/p>\n

After a meteoric rise, Leopold Aschenbrenner’s AI-focused hedge fund, Situational Awareness, was forced to sell most of its publicly traded stock portfolio to Citadel following steep losses on AI-related positions in recent weeks. The fund held onto its private investments, including its stake in Anthropic.<\/p>\n

Read more Meet the Gen Z AI whiz at the center of a hedge fund meltdown<\/a><\/p>\n

The meltdown of Situational Awareness, once sized at $20 billion, set off a wave of reactions and debate over what it said about investing in the AI space and about Aschenbrenner, a former OpenAI researcher who wrote a famous 165-page essay in 2024 about the future of AI. Many reactions and memes also focused on Ken Griffin, the billionaire founder of Citadel.<\/p>\n

Here’s what smart people in tech and investing are saying about the situation.<\/p>\n

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Michael Dempsey, managing partner at Compound<\/h2>\n
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Michael Dempsey, managing partner at the New York-based investment firm Compound, said in a long post on X that Situational Awareness’s “prescience was incredibly impressive and likely should still be funded and respected.”<\/p>\n

“That said, anyone who has experience in public markets could somewhat easily see this was One Big Trade and so probably there should have been way better views on risk besides buying index-level puts,” he added, outlining several ways he thought the hedge fund may have mismanaged its risk.<\/p>\n

“We shouldn’t grave dance but should instead internalize some of the learnings here and appreciate someone who basically called their shot and executed on it but (thus far) didn’t land the plane.”<\/p>\n<\/div>\n<\/div>\n<\/section>\n

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Shay Boloor, chief market strategist at Futurum Equities<\/h2>\n
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Shay Boloor, chief market strategist at Futurum Equities and commentator on business networks, said this was “the story of 2026.”<\/p>\n

“Ken Griffin’s Citadel was pushing surprise-rate-hike fears just days before the AI trade collapsed and forced 4x-levered Leopold Aschenbrenner’s Situational Awareness to unload its book near the lows. Citadel then reportedly bought most of those assets at significantly lower prices knowing that if sentiment deteriorated enough the fund could be forced to sell which makes the entire sequence look absolutely ruthless,” he wrote on X.<\/p>\n

“This is why the stock market is the greatest game on Earth.”<\/p>\n<\/div>\n<\/div>\n<\/section>\n

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Tim Culpan, former Bloomberg columnist<\/h2>\n
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Tim Culpan, a former Bloomberg columnist, said the “meltdown” at Situational Awareness “shows the difference between intelligence and wisdom.”<\/p>\n

“Even if his investment thesis is spot on in the long-term, leveraged positions remove wiggle room to ride out the massive sell offs that inevitably occur in a hot market,” he wrote on LinkedIn.<\/p>\n<\/div>\n<\/div>\n<\/section>\n

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Martin Shkreli, investor<\/h2>\n
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Martin Shkreli, an investor and former pharmaceutical executive convicted of fraud, appeared on the daily technology show TPBN on Thursday and discussed what led up to Situational Awareness’s meltdown. He said it demonstrated how Wall Street works.<\/p>\n

“It’s the saddest, most Machiavellian thing. But he sort of had to blow up. There’s no other ending. Because of the leverage level,” he said.<\/p>\n

He also said he thinks Aschenbrenner is “brilliant” and could still have a future in investing despite this being an “extremely humbling moment.”<\/p>\n

Read more OpenAI CEO Sam Altman announces \u2018major\u2019 price cuts as the company signals a focus on cost efficiency<\/a><\/p>\n

“He’ll be back and successful,” he said.<\/p>\n<\/div>\n<\/div>\n<\/section>\n

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Christian Keil, partner at Andreessen Horowitz<\/h2>\n
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Christian Keil, partner at Andreessen Horowitz, chimed in on why he thought Aschenbrenner’s story was eliciting such a strong reaction online.<\/p>\n

“People love a good downfall,” he wrote on X. “Gives them a nice little excuse for why they never had a meteoric rise of their own.”<\/p>\n<\/div>\n<\/div>\n<\/section>\n

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Hank Medina, founder of Litquidity<\/h2>\n
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Hank Medina, founder of Litquidity, the popular financial account on X and investment company, summed up the story by comparing Aschenbrenner, who is in his early 20s, to Griffin, a seasoned vet on Wall Street.<\/p>\n

“This is what happens when a tech bro tries to play hedge fund manager,” he wrote on X. “He gets blown up by leverage and ripped to shreds by a seasoned financial juggernaut who strikes when there’s blood in the water,”<\/p>\n<\/div>\n<\/div>\n<\/section>\n

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Tom Shaughnessy, founding partner at Delphi Ventures<\/h2>\n
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Tom Shaughnessy, a founding partner at the tech investment firm Delphi Ventures, defended Aschenbrenner.<\/p>\n

“Dunking on leopold is ridiculously stupid,” he wrote on X. “He left OpenAI, had a thesis, raised a fund, executed against it aggressively and moved some serious capital around.”<\/p>\n

“Respect to those in the arena everyone else is a keyboard warrior,” he added. “Take more risk.”<\/p>\n<\/div>\n<\/div>\n<\/section>\n

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Alex Kolicich, VC founder and ex-Palantir advisor<\/h2>\n
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Alex Kolicich, founding partner at the venture capital firm 8VC, said on X that the Situational Awareness collapse is a loss for the “SF hedge fund industry.”<\/p>\n

“Thought it could be the cornerstone of rebirth for that space,” he wrote. “Anyone else trying to start a Hedge Fund in SF reach out. We need to dominate there.”<\/p>\n<\/div>\n<\/div>\n<\/section>\n

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Alistair Barr, tech anchor at Business Insider<\/h2>\n
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Business Insider’s Alistair Barr compared the fund’s implosion to the collapse of Long-Term Capital Management and Peter Thiel’s Clarium Capital. Both funds showed how a sound thesis doesn’t guarantee a winning trade.<\/p>\n

In Situational Awareness’s case, the market turned on the fund, but “that doesn’t necessarily mean Aschenbrenner’s ideas” on AI infrastructure are wrong, Barr wrote.<\/p>\n

Barr proposed that one possible explanation behind the fund’s downfall could be the sell-off of South Korean memory-chip stocks in June, which triggered margin calls. Thus, leading to a vicious feedback loop that spread into other AI-related stocks owned by Situational Awareness.<\/p>\n

Read more Patreon is upping its RTO mandate after laying off 20% of staff<\/a><\/p>\n<\/div>\n<\/div>\n<\/section><\/div>\n<\/section>\n","protected":false},"excerpt":{"rendered":"

Leopold Aschenbrenner’s AI hedge fund, Situational Awareness, sold most of its stock portfolio to Citadel. 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