Leopold Aschenbrenner hedge fund unwinds trades after AI losses

The Leopold Aschenbrenner hedge fund Situational Awareness is cutting back trades after a painful stretch for its artificial intelligence portfolio, CNBC reported, citing people familiar with the matter. For retail investors, the concern is that forced selling by a large fund can add pressure to stocks tied to the same AI build-out that has powered a major market theme.

Situational Awareness, which CNBC said has $24 billion in assets, has taken large recent losses from bets on AI infrastructure companies including SK Hynix, according to people familiar with the matter. The fund was also hurt by short positions in software names such as Adobe that moved against it, those people told CNBC.

A short position is a trade that benefits when a security falls. If the price rises instead, losses can build quickly because the investor may need to buy back the stock at a higher price.

What happened to Leopold Aschenbrenner’s hedge fund?

CNBC reported that Situational Awareness is unwinding many of its trades and may need to liquidate assets, according to people familiar with the matter. The situation was still changing, and CNBC said it could not determine whether the fund was meeting margin calls through negotiated sales or whether a wider portfolio liquidation was already in progress.

A margin call happens when a broker requires an investor to add cash or reduce risk because borrowed-money trades have moved the wrong way. If the investor cannot meet the requirement, positions may need to be sold.

Several prime brokers, including Bank of America, Goldman Sachs and JPMorgan Chase, have been working with the fund as it tries to meet margin requirements or shrink positions in an orderly way, CNBC reported, citing people familiar with the discussions. Prime brokers provide financing, trading and other services to hedge funds.

Those brokers were marketing a collection of Situational Awareness holdings on both the long and short side for sale before the start of trading Thursday, according to CNBC’s reporting. A long position is a standard bet that an asset will rise.

Why the AI trade is in focus

The pressure on Situational Awareness is a test for the thesis that made Aschenbrenner one of the best-known names in AI investing, according to CNBC. The fund was built around the view that more capable AI systems would demand far more chips, memory, data centers and power generation.

CNBC reported that a forced reduction by the fund could weigh on some of the companies that had benefited from investor enthusiasm around that build-out. The size of the fund’s losses, the amount of cash it is seeking and the scope of any asset sales could not immediately be determined, according to the report.

Situational Awareness has also tried to raise liquidity by offering stakes in private companies, CNBC reported, citing people familiar with the matter. Those efforts include a stake in Anthropic, though CNBC said the size of the position on offer could not be determined. Prospective buyers have shown interest in buying some or all of that stake, people familiar with the process told CNBC.

Situational Awareness did not immediately respond to CNBC’s requests for comment.

Who is Leopold Aschenbrenner?

Aschenbrenner, 25, founded Situational Awareness after leaving OpenAI in 2024, CNBC reported. He became prominent in tech and investing circles after publishing essays that argued rapid AI progress would require a broad expansion of computing power, advanced semiconductors, memory and energy infrastructure.

CNBC reported that Aschenbrenner graduated as Columbia University’s valedictorian at 19 and later joined OpenAI’s Superalignment team. OpenAI fired him in 2024 over what it described as an improper disclosure of internal information. Aschenbrenner has disputed that account, saying he shared a largely nonconfidential planning document with outside researchers for feedback and that his firing followed tensions over warnings he raised about OpenAI security practices. OpenAI has said those concerns were unrelated to his departure.

This story draws on original reporting from CNBC.