Citadel has sold more than 80% of the $4 billion in stock holdings it recently acquired from Situational Awareness, a hedge fund focused on artificial intelligence. According to a letter to investors seen on Friday, the firm led by Ken Griffin has divested most of the positions through nearly 100 block trades.
The transaction followed a period of market volatility in the technology sector. Situational Awareness, managed by former OpenAI researcher Leopold Aschenbrenner, saw its portfolio value decline by 67% in July. The resulting losses forced the fund to begin unwinding its $16 billion public equities book, leading to the sale of the bulk of its stock holdings to Citadel last month.
In the investor letter, Griffin stated that Citadel executed the largest intraday block trades of the year in 10 different companies while distributing the risk from the Situational Awareness portfolio. Griffin noted that the firm's ability to quickly evaluate complex risks and deploy capital was central to the acquisition. Citadel, which manages approximately $77 billion in assets, declined to provide further comment.
The scale of the liquidation highlights the concentration of risk within AI-focused investment vehicles and the role large multi-strategy funds play as liquidity providers during market stress. Aschenbrenner’s fund faced a rapid decline from a $16 billion public book, a scale that required what Griffin described as "extraordinary cooperation" from major banks and prime brokerages to manage. For market participants, this sets a precedent for how quickly large-scale AI bets can be unwound when sector valuations shift, as seen in the July tech selloff.
Looking ahead, Citadel appears to have largely moved past the immediate risk of the acquisition, with its flagship Wellington fund reporting a 5.94% gain in July and a 12% increase for the year. Situational Awareness has already unwound the majority of its public equities. Future reporting will determine if the remaining 20% of the original $4 billion portfolio is held long-term or further liquidated as market conditions for technology shares evolve. Dates for any remaining scheduled trades have not been reported.