By Anirban Sen and Arasu Kannagi Basil
Aug 21 (Reuters) – Billionaire investor Ken Griffin’s Citadel has shed more than 80% of bets from the original portfolio of Leopold Aschenbrenner’s Situational Awareness that it recently purchased, according to a letter to investors seen by Reuters on Friday.
Situational, an AI-focused hedge fund run by former OpenAI researcher Aschenbrenner, sold the bulk of its stock bets to Citadel last month after heavy losses in its tech holdings forced it to unwind most of its public equities portfolio.
Citadel has since completed nearly 100 block trades totaling over $4 billion in market value as it shed positions in the portfolio, which Griffin said included the largest intraday block trades of the year in 10 different names. The firm, which has about $77 billion of assets under management, declined to comment.
“Our ability to distribute this risk was central to our investment thesis. These moments highlight our ability to quickly evaluate complex risks, deploy capital with speed and conviction, and execute with precision,” Griffin said in the letter.
Citadel is one of the world’s most profitable and largest hedge funds, and has built a reputation for seizing opportunities during periods of market dislocation.
After a selloff in AI stocks, the Situational Awareness’ portfolio lost 67% of its value in July, and was forced to unwind most of its $16 billion public equities book.
Griffin and his top lieutenants had pulled an all-nighter to analyze the trading book positions of Situational and how liquid the bets were, Reuters reported last month.
Citadel bought some of the Situational positions at a discount of more than 10%, helping stabilize the market on the last two trading days of July, investors had said.
“A transaction of this magnitude could not have been completed without the extraordinary cooperation of the trading and prime brokerage teams at the banks serving both firms,” Griffin said.
Citadel Wellington, the firm’s flagship multi-strategy fund, gained 5.94% in July, leaving it up 12% for the year.
(Reporting by Arasu Kannagi Basil in Bengaluru and Anirban Sen in New York; Editing by Shilpi Majumdar)
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