AI Stock Guru Suffers 67% Loss, Vows to Stop Leveraged Trading

Leopold Aschenbrenner, known as the 'AI Stock Guru,' runs the Situational Awareness fund which specializes in AI investments. The fund suffered massive losses due to over-leveraged AI stock investments, drawing global investor attention.

This AI-focused hedge fund faced forced liquidation risks from its leveraged operations and sold most of its stock portfolio to Ken Griffin's Citadel this week.

Compared to some South Korean retail investors who went bankrupt, the 'AI Stock Guru' still has capital to recover.

On Thursday evening Eastern Time, while the capital markets were discussing the 'AI Stock Guru's' massive losses, Aschenbrenner sent a new letter to fund investors.

In the letter, he took full responsibility for the fund's 67% asset plunge in July and stated that learning necessary lessons from this experience would be his mission.

More importantly, Aschenbrenner promised that the fund would continue operations and not exit the public stock market.

He wrote, 'Over the past two years, despite several sharp drawdowns, we achieved excellent performance. However, our fund must always maintain this structure: even after losses, we have the ability to regroup and fight another day.'

The 'AI Stock Guru' also promised that Situational Awareness would no longer borrow from banks to leverage stock investments.

According to documents submitted to the U.S. Securities and Exchange Commission (SEC), the fund's holdings of U.S. stocks were slightly over $2 billion by the end of 2024, grew to $55 billion by the end of 2025, and further increased to $137 billion by the end of March this year.

Behind the rapid growth in asset management scale were successful bets on high-flying stocks like SanDisk and Bloom Energy, as well as aggressive operations with multiple leverage.

Under U.S. regulations, U.S. stock funds must submit their stock holdings reports by mid-August. At that time, the market will get a glimpse of the fund's stock portfolio before the 'Black July' arrived.

The letter did not disclose the fund's latest asset management scale. Since many early investors are restricted by lock-up periods, the earliest they can redeem funds is in September.

Aschenbrenner only stated that despite the heavy blow in July, the fund's year-to-date return was 80%.

Market rumors suggest that the fund's asset management scale once reached $450 billion in early July, but after being forced to sell leveraged stock positions at a discount to Citadel this week, the remaining holdings have dropped to about $100 billion, roughly matching the 80% year-to-date return.

A significant portion of these assets came from holdings in the AI startup Anthropic.

According to insiders, Aschenbrenner and Avital Balwit, the chief of staff to the CEO of Anthropic, are scheduled to hold a wedding this weekend. The two announced their engagement last year.