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

Citadel founder and CEO Ken Griffin is giving more insight into Wall Street’s most dramatic AI blowup of the year. Griffin told clients in a Friday letter that the firm has already unwound more than 80% of the risk from the trading book it snapped up from Leopold Aschenbrenner‘s Situational Awareness. 

The math backs up the swagger: Griffin’s flagship multistrategy fund, Wellington, gained 5.9% in July, its best month since 2022, CNBC reported. Griffin said the firm executed over 100 block trades worth more than $4 billion in market value to bring down its exposure.

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How the Rescue Unfolded

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

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

Griffin’s team moved fast, with deal talks between the two firms beginning on July 29 and closing the transaction within roughly 24 hours, CNBC reported.

Citadel co-CIO Pablo Salame, COO Gerald Beeson and other senior executives pulled an all-nighter to assess the liquidity of Situational Awareness’s positions before striking a deal, per Reuters. 

A Win for Citadel

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

Griffin credited the banks involved for the smooth execution, writing that 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 his fund’s private holdings, including a stake in Anthropic. Situational Awareness lost 67% in July but remained up roughly 80% for the year, buoyed by earlier gains. Citadel’s discounted entry into that book has so far proven to be a win.

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