The “AI stock god” returned to the battlefield after falling: Ashenbrenner Fund plummeted 67% in July and then deleveraged, betting $400 million on private companies

The Zhitong Finance App learned that a few days after its hedge fund Situational Awareness was on the verge of collapse due to high leverage, “AI stock god” Leopold Ashenbrenner has returned to the investment market. According to people familiar with the matter, Ashenbrenner invested 400 million US dollars in a private company. This capital injection is an additional investment after investing $100 million in the same company last month. It is currently unclear which companies in the Situational Awareness portfolio received this investment.

The investment, completed on Tuesday, is the first sign that Ashen Brenner is trying to restructure Situational Awareness. Based on the AI industry insights accumulated by the OpenAI core research team, Ashenbrenner founded this hedge fund called “Situational Awareness” in September 2024. By betting on AI-related stocks with high leverage, Situational Awareness has generated jaw-dropping returns in just a few months.

Situational Awareness revealed in a letter to investors in early July this year that the combined return for the first half of 2026 was as high as 439%. According to another report, the fund's management scale climbed to 45 billion US dollars in early July.

However, AI-related stocks, led by chip stocks, experienced a deep correction in July, causing a heavy blow to Ashenbrenner. According to the data, its main holdings in stocks such as SanDisk, CoreWeave, and Bloom Energy all plummeted in July. What's more fatal is that Situational Awareness uses extremely high leverage — according to people familiar with the matter, the fund's leverage ratio was once close to 4 times, and it also held large-scale software stock short positions, but recently software stocks have been revised in valuation, causing the fund to be “beaten on both sides.”

In a letter to investors on July 24, Ashenbrenner characterized current market fluctuations as a “strategic entry window” and added a statement at the end of the letter inviting investors to add capital on August 1. By July 30, in the face of additional security deposit notices from financiers, Situational Awareness urgently sold most of its holdings to Castle Investments owned by legendary Wall Street hedge fund manager Ken Griffin, and completely removed leverage. The size of the fund plummeted from 45 billion US dollars at the beginning of July to about 10 billion US dollars.

According to reports, Castle Investments bought most of Situational Awareness's alleged remaining 16 billion US dollar open market stock holdings. Situational Awareness still retains positions purchased with its own capital (including customer money), as well as investments in private companies such as Anthropic, worth about $5 billion.

Reports indicate that in a hurry to raise cash to meet these security deposit requirements, Ashenbrenner once considered selling shares in some private companies, including AI company Anthropic, cloud computing infrastructure company FluidStack, and AI chip startup MatX. But in the end, an agreement with Castle Investments allowed the fund to keep its most treasured private company investments.

In an apology letter sent to investors last Friday, Ashenbrenner stated that he took full responsibility and promised to completely remove leverage and start again with his own funds. Ashenbrenner said that at one point the fund was close to the brink of unacceptable permanent capital loss, far exceeding the risk limit that should have been allowed. Although the team eventually took action to protect investors' capital, putting the fund in this situation should never have happened, and he bears full responsibility for it.

Ashenbrenner repeated the reason for this huge loss in the letter: in recent weeks, the market environment has deteriorated dramatically; unfavorable price trends, sudden exhaustion of liquidity, and collaborative shorting pressure on fund positions have all formed a trend similar to bank crowding out. Faced with the escalating liquidity crisis, the team acted decisively to protect partner capital and removed all leverage through large transactions.

Ashenbrenner said that Situational Awareness will continue to operate and will not withdraw from the open market. He promised that the fund will permanently remove all leverage from its balance sheet and will not borrow funds to expand its position in the future.

Ashenbrenner said in the letter that many people will question whether it can get back on its feet. His confidence in the long-term AI investment theme remains firm. Long-term opportunities in AI computing power and infrastructure still exist, but the way he opens positions will fundamentally change. He said, “We have retained our private equity investments, including our shares in Anthropic. We will rebuild an unleveraged portfolio over time.”

Ashenbrenner said that even after experiencing a 67% retracement in July, up to now, the fund has maintained positive returns during the year. At the end of his apology letter, he said, “The road ahead is difficult, but we are determined to rebuild.”

Unlike other hedge funds of a similar size, according to some people familiar with the matter, most investors in Ashenbrenner's funds are wealthy individuals and family offices in the San Francisco Bay Area. According to reports, these investors include Greenoaks founded by Neil Mehta, a foundation owned by Gaurav Kapadia, founder of investment company XN, and Feroz Dewan, former head of Tiger Global Management's public stock department. According to the report, Dan Sundheim is also one of the fund's investors. Up to now, there have been no signs of large-scale divestment by major investors.