Situational Awareness, the hedge fund founded by Leopold Aschenbrenner, reportedly sold its entire publicly listed equity portfolio—about $16 billion—in a single discounted transaction on July 30 after margin calls on leveraged AI-related positions triggered a 36-hour liquidity scramble.
The sale cut the firm’s reported assets under management to roughly $10 billion from a peak near $45 billion earlier in July, leaving the fund primarily with private holdings. The episode places renewed attention on the risks of concentrated leverage in the AI infrastructure trade, where steep moves in semiconductor, data-center and compute stocks can quickly turn paper gains into urgent collateral demands.
The buyer acquired both the fund’s long and short public-equity positions, according to the account of the transaction. The package was completed early on July 30 after Situational Awareness had sought buyers for more than $10 billion in stock the previous night.
The Nasdaq 100 rose more than 3% after the transaction became known, suggesting that the removal of a large forced seller helped ease immediate pressure on the technology-heavy index. The move does not establish that the fund’s sale alone drove the index’s gain, but it illustrates how a large deleveraging event can influence trading conditions in a concentrated market.
Leveraged AI portfolio came under pressure
Situational Awareness built its public-market strategy around AI compute and infrastructure companies, using total return swaps to gain exposure. Under that arrangement, a bank owns the shares while the hedge fund receives the economic gains or losses from the position. The structure can allow a fund to take larger positions with less upfront cash, but it also gives prime brokers the right to demand additional collateral when markets move against the trade.
The fund reportedly used about four times leverage. That approach amplified the gains during the earlier AI-stock rally, helping the firm expand from roughly $225 million in seed capital to tens of billions of dollars in assets under management. Its reported net return reached 439% by June 30, while cumulative performance since the 2024 launch exceeded 2,000%, according to the fund’s reported figures.
Those results were produced by a team of four investment professionals within an eight-person organization. The rapid growth made Situational Awareness an unusually large vehicle for a firm of that size, while also concentrating operational and risk-management demands among a small group.
Its largest long positions included SK Hynix, Nebius, SanDisk, Micron, CoreWeave and Bloom Energy. The fund also shorted traditional software companies, including Adobe, betting that AI infrastructure spending would outperform established software businesses.
That positioning created a difficult combination in July. Several AI-linked hardware and compute names fell sharply, while software stocks rallied, leaving the fund exposed to losses on both its long holdings and its short positions.
Nebius fell about 48% from its June high, erasing roughly $35 billion in market value, according to the figures supplied. SanDisk declined more than 56% in just over a month. CoreWeave, Micron and SK Hynix each dropped by more than 35% during July.
Prime brokers sought collateral as losses mounted
Bank of America, Goldman Sachs and JPMorgan Chase were among Situational Awareness’ prime brokers, according to the account. As the value of the swap-linked positions declined, the banks issued margin calls requiring the fund to either post more collateral or reduce its exposures.
Margin calls can accelerate a market downturn when several institutions hold similar positions. A fund facing a collateral demand may have to sell the assets it can liquidate fastest, regardless of whether managers still believe in the investment case. That selling can push prices lower, prompting more margin requirements across interconnected portfolios.
Situational Awareness appears to have avoided a piecemeal liquidation by finding a buyer willing to take the entire public-equity package. Yet the discount required to complete such a transaction reflects the limited bargaining power of a seller operating under a tight deadline.
The fund plans to continue as a private-investment-focused vehicle, retaining roughly $10 billion in private holdings. Those assets reportedly include an estimated $5 billion stake in Anthropic. Private-company stakes may preserve long-term upside, but they cannot usually be sold as quickly as listed shares and their eventual value depends on future financing rounds, acquisitions or public listings.
Avital Balwit, Aschenbrenner’s fiancée, is chief of staff to Anthropic Chief Executive Officer Dario Amodei. The relationship adds attention to the fund’s remaining Anthropic exposure, though the supplied account does not indicate that it affected the July deleveraging.
Crypto markets may watch technology risk, not mirror it
The forced sale also offers a cautionary data point for crypto traders using leverage. Bitcoin and other major digital assets often trade alongside technology stocks during periods when market participants are reducing risk, though the relationship is variable and can weaken quickly.
The supplied market data put the 90-day correlation between leading crypto assets and the Nasdaq at 0.46. A correlation of that level indicates a meaningful, but far from fixed, tendency to move in the same direction. It does not mean that a sell-off in AI infrastructure shares will automatically produce matching losses in digital assets.
Leverage remains the more direct transmission channel. When volatility rises across technology and risk assets, futures and perpetual-contract traders can face liquidations if their collateral falls below exchange requirements. A sharp crypto decline reportedly wiped out $1.8 billion in leveraged positions last month, demonstrating how rapidly losses can compound when automated liquidation systems close positions.
Situational Awareness’ reported unwind is therefore less a forecast of a crypto crash than a reminder that crowded, leveraged trades can become fragile when asset prices reverse. Traders holding derivatives tied to volatile assets face the same practical constraint that confronted the hedge fund: collateral requirements can force decisions long before a long-term market view has time to play out.
Worried about margin calls and liquidation risk? Learn smarter leverage management in this detailed guide for active traders.
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