Hedge Fund ‘Situational Awareness’ Last To Become Aware Of Situation

NEW YORK — There are many kinds of awareness in investment management.

There is market awareness: knowing what everyone else is doing. Risk awareness: understanding what happens when they stop. Liquidity awareness: recognising that the price on a screen is not necessarily the price available when you need to sell. And leverage awareness: remembering that borrowed money magnifies returns in both directions.

Then there is Situational Awareness, the name of a hedge fund that recently demonstrated limited proficiency in the other four.

Situational Awareness LP was forced to sell its entire public stock book to Ken Griffin’s Citadel on Thursday after margin calls, leaving assets at roughly $10 billion, down from $45 billion. The fund was up 439% at the end of June and levered close to four times, long AI infrastructure and short the software companies AI was meant to destroy. CNBC + 2

“Nobody had this situation flagged,” said one analyst familiar with the internal discussions. “We’re more of a big-picture shop. The first detailed update came from a man at JPMorgan.”

In a July 24 letter, founder Leopold Aschenbrenner said the fund had “not been immune” to the selloff and called the moment one of the best buying windows since early 2025. A postscript invited clients to add fresh capital on August 1. TNW | FinanceTNW | Finance

By Thursday afternoon, the stocks the fund had been forced to dump that morning were up 25%. Substack

At press time, Situational Awareness was aware of this.