"AI Stock God" returns to the battlefield after falling from grace: Ashenbrenner Fund underwent a 67% plunge in July and is now deleveraging, with a $400 million bet on private companies.

A few days after the hedge fund Situational Awareness was on the verge of collapse due to high leverage, AI stock god Leopold Aschenbrenner has returned to the investment market. According to informed sources, Aschenbrenner has invested $400 million in a private company. This injection of funds is an additional investment following a $100 million investment in the same company last month. It remains unclear which company in the Situational Awareness portfolio received this investment. This investment, completed on Tuesday, is the first sign of Aschenbrenner's attempt to restructure Situational Awareness. Having accumulated deep insights into the AI industry while part of OpenAI's core research team, Aschenbrenner founded the hedge fund named Situational Awareness in September 2024. With high-leverage bets on AI-related stocks, Situational Awareness generated astonishing returns within just a few months. In a letter to investors sent in early July, Situational Awareness disclosed that its portfolio return reached as high as 439% in the first half of 2026. Reports also indicated that the fund's management scale had once surged to $45 billion in early July. However, AI-related stocks, particularly chip stocks, experienced a sharp correction in July, which dealt a heavy blow to Aschenbrenner. Data showed that major holdings such as SanDisk, CoreWeave, and Bloom Energy all plummeted in July. More critically, Situational Awareness employed extremely high leverageaccording to insiders, the fund's leverage at one point approached 4 times, while simultaneously holding large short positions in software stocks. Recent valuation recovery in software stocks left the fund squeezed from both sides. In a letter to investors on July 24, Aschenbrenner characterized the current market volatility as a strategic intervention window, and added a postscript inviting investors to increase their investments on August 1. By July 30, facing margin calls from financiers, Situational Awareness urgently sold most of its holdings to Citadel, led by legendary hedge fund manager Ken Griffin, and completely unwound its leverage. The size of the fund plummeted from $45 billion in early July to about $10 billion. It is understood that Citadel bought up most of what was reportedly the remaining $16 billion of publicly traded stock holdings of Situational Awareness. The fund still retains positions purchased with its own funds (including clients' money) as well as investments in private companies such as Anthropic, valued at about $5 billion. Reports indicated that in its haste to gather cash to meet these margin requirements, Aschenbrenner considered selling some stakes in private companies he held, including AI company Anthropic, cloud infrastructure company Fluidstack, and AI chip startup MatX. However, the agreement reached with Citadel allowed the fund to retain its most treasured private company investments. In an apology letter sent to investors last Friday, Aschenbrenner took full responsibility and committed to completely removing leverage to restart with its own capital. He stated that the fund had come dangerously close to unacceptable permanent capital losses, far exceeding the risk limits that should have been allowed. Although the team ultimately acted to safeguard investor capital, he takes full responsibility for putting the fund in such a situation. Aschenbrenner revisited the reasons for this significant loss in his letter: recently, the market environment has deteriorated sharply; adverse price movements, a sudden liquidity crunch, and coordinated short-selling pressure against the fund's positions created a dynamic akin to a bank run. Faced with an escalating liquidity crisis, the team decisively took action to protect partner capital by clearing all leverage through block trades. Aschenbrenner stated that Situational Awareness will continue to operate and will not exit the public market. He promised that the fund will permanently eliminate all leverage from its balance sheet and will no longer borrow funds to amplify positions in the future. Aschenbrenner mentioned that many will question whether he can make a comeback. He remains confident in the long-term investment theme of artificial intelligence, stating that long-term opportunities in AI computing and infrastructure still exist, but his approach to building positions will fundamentally change. He said, We have retained private equity investments, including our stake in Anthropic. Over time, we will rebuild a unleveraged portfolio. Aschenbrenner noted that even after a 67% pullback in July, the fund has still maintained positive returns for the year to date. At the end of his apology letter, he stated, The road ahead will be tough, but we are determined to rebuild. Unlike other hedge funds of similar scale, some insiders revealed that most investors in Aschenbrenner's fund are wealthy individuals and family offices from the San Francisco Bay Area. Reports indicate that these investors include the Greenoaks founded by Neil Mehta, the foundation of XN founded by Gaurav Kapadia, and Feroz Dewan, former head of public equities at Tiger Global Management. Dan Sundheim is also reportedly one of the fund's investors. So far, there have been no signs of major investors withdrawing their funds en masse.