Pioneering AI hedge fund with returns of 1000% since inception discovers the downside of leverage

By Jules Rimmer

Leopold Aschenbrenner reportedly asking for fresh capital

Former OpenAI employee Leopold Aschenbrenner established his Situational Awareness hedge fund to great fanfare in 2024. Betting on the AI boom, until as recently as June 2026, the growth in assets under management and investment returns had been explosive.

Now though, the FT is carrying a story, that the fund has suffered losses sufficiently heavy to force Aschenbrenner to reach out to original investors and request fresh capital, as part of a letter sent out that the newspaper said it has seen.

The FT also reported, citing sources, that Aschenbrenner offered investors the opportunity to buy assets held within the fund directly.

MarketWatch approached Situational Awareness for comment by email but no reply was received yet.

Aschenbrenner was an AI wunderkind who launched his project in 2024 at the tender age of just 23. His mission statement, articulated in an essay published online, was to invest early and big in AI technologies, both public and private, and until very recently his bets had paid off handsomely. Returns since inception had exceeded 1000% and the fund had expanded to around $20 billion, according to the FT.

Aschenbrenner graduated from Columbia aged 19 and set up his hedge fund at the age of 23

However, a cursory glance down the holdings list of Situational Awareness will explain why the fund has possibly run into trouble, especially given its use of leverage which amplifies profits on the way up but compounds them on the way down.

Based on the most recent SEC 13F filings in March of this year Situational Awareness owned stakes in Bloom Energy (BE), Riot Platforms (RIOT), Nvidia (NVDA), AMD (AMD), Taiwan Semiconductor Manufacturing Company (TSM), Micron (MU), Oracle (ORCL), Nebius (NBIS), Sandisk (SNDK) and it was a cornerstone investor in the recent Nasdaq-listed equity offering from SK Hynix (SKHY).

Many of these companies have experienced meaningful corrections in the past six weeks or so. Among other holdings, Aschenbrenner was a very early investor in Anthropic and in the letter to investors, he cites its potential IPO in the third quarter of this year as a significant catalyst.

Research boutique Citrini posted some commentary on the potential developments at Situational Awareness on X Thursday. The post sought to downplay the gravity of the situation and opined that investors are likely to give Aschenbrenner the benefit of the doubt. "To put that into perspective, if you invested $100M with SALP at inception and wiped out ninety percent in July, your investment would be worth $230M," said Citrini.

Aschenbrenner reportedly referred to the current situation as "the best buying opportunity since April 2025," in the letter the FT saw. Citrini predicts that investors will stump up fresh capital, making it "more likely now that Leopold causes the bottom than causes AI to continue going down."

-Jules Rimmer

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07-30-26 0921ET