Leopold Aschenbrenner's Hedge Fund Loses 67% in July as AI Bets Unravel
In August 2026, Leopold Aschenbrenner’s hedge fund Situational Awareness suffered a significant loss of 67% in July due to leveraged bets on the artificial intelligence sector. The sell-off forced the firm to offload most public holdings and remove all leverage from its portfolio. Despite this setback, the fund is still up around 80% for the year following an earlier strong performance. The collapse echoes historical Wall Street blowups involving excessive leverage, such as Long-Term Capital Management in 1998. Aschenbrenner had previously predicted a massive AI-driven industrial shift and was bullish on its long-term potential. However, his concentrated bets combined with leveraged financing led to liquidity issues when the market turned. The fund retained private investments like its stake in Anthropic but sold public stocks for quick cash due to pressure from lenders demanding collateral. The situation highlights how leverage can amplify both gains and losses, especially during periods of declining asset values or reduced market liquidity.
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