Situational Awareness Plunges 67% in AI Selloff
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- Situational Awareness plunged 67% in July and was forced to sell most of its public equities book at a deep discount to meet margin calls, offloading to Ken Griffin's Citadel.
- Citadel jumped 6% after snapping up Situational Awareness's portfolio in the fire-sale deal, per a related Bloomberg article.
- Whale Rock sank 22% as the AI selloff crippled hedge fund returns, according to a separate Bloomberg report.
- Coatue's hedge fund dropped 8% in its worst monthly loss in more than a year.
- Altimeter fell 11%, while Balyasny and Verition also joined the cohort of hedge funds losing money in July.
- Investor concerns over the sustainability of massive corporate spending on AI weighed on the sector throughout the month, per Bloomberg's takeaways.
Why it matters: Multiple top hedge funds lost double digits in July's AI selloff, with the most leveraged — Situational Awareness — forced to sell most of its public equities at a deep discount to Citadel to meet margin calls. Citadel gained 6% on the deal. The episode shows concentrated AI bets can unwind violently when corporate AI spending comes under question.
