Situational Awareness, a hedge fund founded by German-born Leopold Aschenbrenner in 2024, has started to unravel after its investments went south. The fund, which was closely tracked by Wall Street and the AI community, remained largely unknown outside these circles until now.
Background
Aschenbrenner, a former OpenAI employee, founded the hedge fund on the premise that AI would be the dominant driver of global market returns over the next decade. He laid out his rationale in a 165-page essay in June 2024, arguing that governments, businesses, and investors underestimated how quickly AI would transform the economy.
Situational Awareness started with early backing from prominent Silicon Valley investors, including the founders of payment processor Stripe. Aschenbrenner managed to turn hundreds of millions of dollars into tens of billions of dollars over the course of roughly two years.
Downfall
The fund employed a risky strategy of borrowing money to purchase stocks. When the investments appreciate, the payoff can be massive. However, when the investments sour, the losses can be catastrophic. The downturn in AI stocks over the course of this month hit the hedge fund extra hard, forcing it to sell off many investments at a steep discount to rival hedge fund Citadel.
Original reporting: El Paso News (HLL/CB) — read the source article.
