Ken Griffin said in a letter to clients Friday that Citadel has unwound more than 80% of the “aggregate risk” tied to its last-minute purchase of assets from AI hedge fund Situational Awareness.
In a letter obtained by the Financial Times, Griffin revealed the firm has conducted more than 100 block trades worth over $4 billion in just three weeks since the purchase – implying Citadel was able to successfully flip AI wunderkind Leopold Aschenbrenner’s flailing portfolio.
Aschenbrenner, the 25-year-old “Nostradamus of AI,” had grown his hedge fund to $20 billion – despite having no prior Wall Street experience – by betting it all on AI. His firm held a $5.7 billion stake in SanDisk, a $5.6 billion one in Micron and short positions on some software stocks.
But in late July, after weeks of rocky trading sessions for AI and tech stocks, Aschenbrenner was forced to offload all of his public stock positions in a 24-hour fireside sale to Citadel.
“Over our nearly thirty-six-year history, we have prided ourselves on being front-footed and proactive during periods of market dislocation,” Griffin wrote in the Friday letter. “Only Citadel could have delivered a solution of this scale on this timeline.”
Citadel did not immediately respond to The Post’s request for comment.
Citadel bought the assets at a roughly 10% discount, hoping it could quickly flip the positions once the market rebounded, according to the Financial Times.
Since Griffin’s firm purchased the portfolio, the AI trade has started to bounce back. Shares of SanDisk and Micron have regained some losses.
Citadel’s billions of dollars’ worth of stock sales in just a few weeks is a sign the hedge fund reaped massive profits from the 11th-hour buy.
Griffin also said in the letter that the firm’s flagship multistrategy Wellington fund saw a 5.94% return in July, its best monthly performance since 2022.
Wall Street and Silicon Valley bigwigs had rushed to invest in Situational Awareness, including Neil Mehta, co-founder of venture-capital firm Greenoaks; Dan Sundheim, founder of hedge fund D1 Capital Partners; investor Gaurav Kapadia’s foundation; and Feroz Dewan, former head of public equities at Tiger Global Management, according to the Wall Street Journal.
Some of these hotshot investors had warned Aschenbrenner – who was previously fired from OpenAI – about the risks of his investing strategy, according to the Journal.
Others were growing frustrated about the Germany-born founder’s lack of communication and disclosures, since Situational Awareness only disclosed returns quarterly, not monthly like most other funds, the report said.
Situational Awareness had borrowed massively to finance its AI bets – and this backfired over the summer as holdings nosedived and some investors asked for their money back.
Jane Street, one of Wall Street’s top investment banks and an investor in Situational Awareness, posted a $15 billion loss in July following the fund’s implosion.
In a letter in late July, Aschenbrenner told investors that Situational Awareness was still up 80% over the year. He had earlier said it was up more than 400% for the first six months of 2026.
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