Hedge Funds Crushed in July AI Selloff; Whale Rock -22%
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- Situational Awareness plunged 67% in July 2026, forcing the fund to offload most of its public equities book to meet margin calls.
- Ken Griffin's Citadel acquired Situational Awareness's stock portfolio at a deep discount in a fire-sale deal, sending Citadel's own shares up 6%.
- Whale Rock sank 21.7% in July as the AI selloff crippled hedge fund returns, according to Bloomberg's reporting.
- AI-focused Altimeter dropped 11%, joining Balyasny and Verition in a broader wave of funds losing money in July.
- Coatue's hedge fund sank 8% in its worst drop in more than a year, also hit by the AI-linked selloff.
- Investor concerns over the sustainability of massive corporate spending on AI weighed on the sector broadly, driving the losses.
Why it matters: Citadel emerged as the primary beneficiary of forced selling, scooping up Situational Awareness's portfolio at a discount while its own shares jumped 6%. The episode shows leveraged AI bets unwinding under margin pressure, with five-plus marquee funds reporting double-digit July losses tied to sustainability concerns over corporate AI spending.
