Citadel Unwinds 80% of Situational Awareness Asset Risk

Founder and CEO Ken Griffin announced that Citadel has unwound more than 80% of the risk associated with assets purchased from Leopold Aschenbrenner's Situational Awareness hedge fund. The acquisition followed steep losses for Situational Awareness in June and July, caused by a faltering artificial intelligence trade that triggered margin calls and compulsory sales.

The original portfolio consisted of long positions in AI-related stocks, including Sandisk and Bloom Energy, and short positions in software companies such as Adobe. To mitigate the risk, Citadel executed over 100 block trades with a total market value exceeding $4 billion. Griffin attributed the speed of the portfolio transfer to the cooperation of trading and prime brokerage teams at the banks serving both firms.

In a separate update, Griffin confirmed that Citadel's flagship Wellington fund returned 5.94% in July, marking the fund's strongest monthly performance since 2022.