Ken Griffin's Citadel has cut over 80% of the risk from its recent purchase of the Situational Awareness portfolio, according to a letter to investors. The hedge fund completed nearly 100 block trades worth more than $4 billion to reduce these positions. This move follows significant losses in July for Situational Awareness, led by Leopold Aschenbrenner, especially in its AI and memory chip investments.
Key Details
Citadel's actions included the largest intraday block trades of the year in ten different stocks. Griffin noted that the firm quickly exited most of the vega risk tied to its options positions. This helped save a lot of capital. Citadel Wellington, the firm's main multi-strategy fund, gained 5.94% in July, bringing its year-to-date gains to over 12%. The firm manages about $77 billion in assets.
Background
The Situational Awareness hedge fund had to unwind a large part of its public equities portfolio, which was valued at around $16 billion before the sell-off. Griffin stressed the need to quickly assess complex risks and execute trades accurately. He said, "Our ability to distribute this risk was central to our investment thesis."
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Citadel's actions may affect the broader tech sector, especially stocks related to AI and memory chips, as the firm sells off positions from the troubled portfolio. Investors will keep an eye on further developments in the tech market as firms adjust to the recent volatility in AI-related stocks.
Based on reporting by: businessinsider.com, livemint.com