Some traders noticed warning indicators before wunderkind’s Situational Awareness fund nosedived: report

Situational Awareness — the hedge fund that wager the farm on AI only to see key investments implode last month — was backed by Wall Street and Silicon Valley big-wigs who started to see the writing on the wall before it blew up.

Investing gurus jumped to back Leopold Aschenbrenner, a 24-year-old with no skilled investing experience who however constructed a $45 billion behemoth that was leveraged closely on AI bets.

Investors included Neil Mehta, co-founder of venture-capital firm Greenoaks; Dan Sundheim, founder of the hedge fund D1 Capital Partners and a major SpaceX shareholder; the basis of Gaurav Kapadia, founder of investment firm XN; and Feroz Dewan, the former head of public equities at Tiger Global Management, the Wall Street Journal reported this week.

Leopold Aschenbrenner, a 24 year-old founder with no prior skilled investing experience, constructed a $45 billion investing behemoth. Leopold Aschenbrenner/Stanford University

Some of the fund’s backers grew pissed off before the disaster and even warned Aschenbrenner about the risks of its high-risk strategy, according to the report. 

The fund’s backers have been also irked by what they thought of to be poor communications and disclosures from the Germany-born Aschenbrenner. Most hedge funds update their traders with performance metrics month-to-month — however Situational only disclosed its returns quarterly, the report said.

The fund borrowed big to finance its AI bets — which acquired it into scorching water after a number of of its holdings plummeted last month, prompting traders to ask for his or her money back. 

To hold the fund alive, Situational offered the majority of its public stock portfolio to Ken Griffin’s Citadel.

A hedge fund as big as Situational usually attracts on institutional traders like pension plans, college endowments, sovereign-wealth funds and personal banks. Situational, against this, drew many rich people partly because institutional traders have been apprehensive about dolling out capital to a fund supervisor with such a scant document, the Journal reported.

Other Situational traders included Stripe co-founders Patrick Collison and John Collison, together with Daniel Gross and Nat Friedman, who lead Meta’s AI efforts. 

Neil Mehta, American enterprise capitalist and the founder and managing accomplice of Greenoaks Capital. Invest Like The Best/Youtube

Aschenbrenner was even capable of faucet Jane Street, a secretive top-performing investment firm that hardly ever allocates capital to outdoors managers.    

In a fund doc, Aschenbrenner laid out his bold — and dangerous — strategy to traders

“There are no limits on the types of securities in which [Situational Awareness Limited Partnership] may take positions on behalf of its clients, the types of positions that it may take, the concentration of its investments or the amount of leverage that it may use,” he wrote.

Many of the investing gurus — including Jane Street co-founder Rob Granieri, adviser Graham Duncan, a co-founder of East Rock Capital, and Dewan — reportedly attended Aschenbrenner’s wedding last weekend in Carmel, a bougie oceanfront enclave close to Monterey Bay, Calif.

Situational’s fund backers have been irked by what they thought of to be poor communications and disclosures from the Germany-born Aschenbrenner. REUTERS

Situational was also backed by foundations including the Laniakea Charitable Foundation – whose president and director Matthew Wage is a Jane Street trader, according to the Journal.

Situational also acquired capital from Good Forever Foundation, a grant-making group centered on AI security and AI coverage. 

Aksia, a research and advisory firm to establishments including pensions, household workplaces and sovereign-wealth funds, met with Aschenbrenner and flagged risk it noticed in the younger investor, writing in 2025: “may want to be wary of hubris leading to risk management issues, particularly if the use of leverage is indeed significant,” according to a copy of the observe seen by the Journal.  

Aschenbrenner launched his hedge fund in 2024 and acquired off to a scorching start selecting shares like memory-chip makers SK Hynix and Sandisk. 

The firm vaulted into one of the fastest-growing hedge funds in years, incomes Aschenbrenner the nickname “the Nostradamus of AI.”

Despite the latest fall from grace, Situational is up 80% on the 12 months and still holds a portfolio of non-public investments, including cloud startup Fluidstack, AI chip startup MatX and Anthropic, the place it owns a multibillion-dollar stake.

With Situational remaining among the top 50 hedge funds in the US, its prime brokers are standing behind the wunderkind, sources told The Post.

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