Accurate takeover of the AI sell-off wave? Citadel mitigates over 80% of portfolio risk, and the flagship fund recorded the best monthly performance since 2022

The Zhitong Finance App learned that Citadel (Citadel) founder Ken Griffin first disclosed in detail to customers on Friday the company's previous disposal of assets after taking over from Situational Awareness hedge funds. Griffin said that Citadel has mitigated more than 80% of the overall risk of the initial acquisition portfolio through more than 100 major transactions, and the relevant transaction market value exceeds 4 billion US dollars.

According to a customer letter obtained by the media, Griffin said that Citadel began negotiations with Situational Awareness on July 29 to discuss the acquisition of part of the fund's holdings. A day later, there were reports that Situational Awareness was forced to sell all of its open market stock positions after suffering serious investment losses, and Citadel was later proven to be the recipient of these assets.

In his letter, Griffin said that the rapid completion of such a large-scale transaction is inseparable from the close cooperation of the bank transaction team and the main broker team that provides services to both parties. He thanked the relevant institutions for their support during the rapid portfolio transfer process.

After completing asset acceptance, Citadel quickly risk-adjusted this huge investment portfolio. Griffin revealed that the company has disposed of assets worth more than 4 billion US dollars through more than 100 major transactions, and has now removed more than 80% of the overall risk exposure of the original investment portfolio.

The flagship fund surged 5.94% in July to create the best monthly performance since 2022

Griffin also confirmed that Citadel's flagship multi-strategy fund Wellington Fund achieved a return of 5.94% in July, making it the fund's best performing month since 2022.

Situational Awareness previously focused heavily on AI-related deals. The fund was founded by Leopold Aschenbrenner, 25, and its core investment logic is based on the judgment that AI will fundamentally reshape the global economy and society.

In terms of specific strategies, on the one hand, Situational Awareness is taking heavy positions on AI-related stocks, and on the other hand, shorting some software companies, betting that the business models of traditional software companies will be impacted by artificial intelligence technology.

However, this highly concentrated long and short strategy was hit hard in June and July.

Although the overall performance of major stock indexes was relatively stable during the same period, some AI-related stocks heavily held by Situational Awareness experienced sharp declines. Among them, individual stocks such as SNDK.US (SNDK.US) and Bloom Energy (BE.US) once fell by more than 50%.

Meanwhile, software stocks shorted by the fund rebounded. For example, the recovery in Adobe (ADBE.US) stock prices caused Situational Awareness not only to lose money on AI long positions, but also to lose money on software stock short positions.

Bulls and bears were hit at the same time, eventually causing the fund to face margin recovery and forced to sell assets. Situational Awareness then emptied open market stock positions, and Citadel became an important successor to related assets.

AI trading rebounded rapidly after takeover

What is quite dramatic is that after Situational Awareness was forced to sell assets and Citadel intervened in the takeover, AI transactions, which had continued to be under pressure until then, clearly rebounded.

Judging from market trends, the timing of Situational Awareness's large-scale sell-off of open market assets has almost become the phased bottom of this round of AI-related stock adjustments that began in June.

This also means that Citadel took over the relevant investment portfolio when market pressure was most severe and Situational Awareness was forced to sell assets due to margin pressure, and the subsequent rebound in the AI sector improved the market environment for these assets.

However, Griffin's current disclosure shows that Citadel did not simply hold all of the assets taken over for a long time, but rather quickly carried out risk management after the acquisition. Through more than 100 major transactions with a total market value of over 4 billion US dollars, Citadel has already mitigated more than 80% of the overall risk of the original investment portfolio.

This transaction not only highlights Citadel's ability to execute large-scale complex asset transactions and risk management, but also reflects the impact of previous sharp fluctuations in AI transactions on highly concentrated investment strategies. Situational Awareness was forced to clear positions after AI bulls and software bears lost at the same time, while Citadel took over assets during a period of drastic market adjustments, and its flagship Wellington Fund then recorded its best monthly performance since 2022.