Ken Griffin's Situational Awareness Bet Pays Off: Citadel's Best Month Since 2022

Citadel founder and CEO Ken Griffin is offering more insight into Wall Street's most dramatic AI blowup of the year. In a Friday letter to clients, Griffin revealed the firm has already unwound over 80% of the risk from the trading book it acquired from Leopold Aschenbrenner's Situational Awareness.

The numbers support the confidence: Griffin's flagship multistrategy fund, Wellington, gained 5.9% in July—its best month since 2022, per CNBC. Griffin noted the firm executed over 100 block trades totaling more than $4 billion in market value to reduce its exposure.

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How the Rescue Unfolded

The rescue traces back to late July. Situational Awareness collapsed under leveraged bets on AI stocks, selling the bulk of its roughly $16 billion public equities portfolio to Citadel after facing margin calls. Prime brokers including Goldman Sachs and JPMorgan Chase helped facilitate the sale, Reuters reported.

Aschenbrenner's fund had ballooned from a $225 million launch to roughly $45 billion in assets before the July selloff, running leverage as high as 400%.

Griffin's team acted swiftly, with deal talks beginning July 29 and the transaction closing within roughly 24 hours, according to CNBC.

Citadel co-CIO Pablo Salame, COO Gerald Beeson and other senior executives worked through the night to assess the liquidity of Situational Awareness's positions before finalizing the deal, per Reuters.

A Win for Citadel

Timing worked in Citadel's favor. Several AI names in the portfolio, including SanDisk Corp. (NASDAQ:SNDK) and CoreWeave Inc. (NASDAQ:CRWV), have rebounded since the forced sale marked a bottom for the broader AI trade.

Griffin credited the banks involved for smooth execution, writing the deal "could not have been completed without the extraordinary cooperation of the trading and prime brokerage teams at the banks serving both firms," per CNBC.

Aschenbrenner, meanwhile, retained the fund's private holdings, including a stake in Anthropic. Situational Awareness lost 67% in July but remains up roughly 80% for the year, boosted by earlier gains. Citadel's discounted entry into that book has so far proven to be a winning move.