Reports of the demise of the “Nostradamus of AI,” a.k.a. Leopold Aschenbrenner, may well be exaggerated, On The Money has learned.
Just ask his prime brokers.
That’s the word from the Wall Street banks that perform this vital function for hedge funds – part of the same smart-money crowd caught off guard last week by Aschenbrenner’s tremendous one-month implosion when his leverage-fueled binge on artificial intelligence shares went south.
It was the whipsaw for the ages: Aschenbrenner’s fund, Situational Awareness, seemed to crater overnight: after recording a 1,000% return since its inception in 2024, it fell a whopping 67% in just a month and needed to unload billions of its holdings to stay afloat.
But as of this week, Achenbrenner’s baby isn’t dead despite its well publicized days-long flame-out in which nearly all its public holdings went to Citadel in a fireside sale. Yes, the fund is down to $10 billion in assets from its high of $45 billion, but even with his massive puke, he’s still up around 80% for the year.
And, remember, $10 billion is still a decent chunk of money, keeping him among the top 50 hedge funds in the country, Wall Streeters tell me.
It’s why Achenbrenner’s prime brokers – the Wall Street firms that are essential for hedge funds to operate because they handle so-called back-office needs – are still keen to stand behind him, sources tell On The Money.
My sources note, for example, Aschenbrenner still has his $5 billion private stake in Dario Amodei’s AI developer, Anthropic that has been preparing to go public, and his fund has lock-ups that make it difficult for big investors like Jane Street to simply pull all their cash.
For that reason some of the world’s most prestigious banks – JP Morgan, Goldman Sachs, Bank of America and Citigroup – haven’t yet cut off prime broker ties with the humbled Nostradamus of AI, I am told. At Morgan Stanley, meanwhile, the prime brokerage folks had planned to onboard Situational Awareness to their platform in September. As of publication, it has no plans to stop, my sources say.
Reps for these banks declined to comment, but wouldn’t deny their continued interest in Achenbrenner’s fund as prime brokers. A request for comment from Situational Awareness has not been answered.
Of course, what’s true today might not be the case tomorrow. Wall Street likes to make money but it always worries about reputational risk, particularly doing business with risk takers on steroids.
Plus, it’s unclear if outside its current investors, Aschenbrenner will be able to attract new money anytime soon. His story, which has been plastered across major media for the past week, will make that difficult. This is, after all, a barely-out-of-college dude. He attained a cult following in the AI ecosystem after a messy exit from the company OpenAI when he penned a widely read treatise on the emerging technology.
He turned that celebrity status into an investment career without any investing experience. His returns were insane, but once the news broke of his losses, people found out why: He juiced up his winnings through massive leverage – borrowing to finance his market gambles the same way that doomed all those banks back in 2008.
That said, Wall Street is filled with second acts: before Larry Fink became the investment sage running money-management behemoth BlackRock, he famously lost his shirt as a trader at the old First Boston. That humbling experience turned him into one of the best risk managers in the business.
Aschenbrenner is obviously smart (he graduated from Columbia at just 19 years of age) and equally humbled, so don’t count him out. The smart money on Wall Street isn’t, at least not yet.
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