Citadel Reduces Total Risk of AI Fund by Over 80%

Citadel has reduced the total risk of the portfolio acquired from Situational Awareness by over 80%. The hedge fund, focused on artificial intelligence (AI) themes, faced losses and collateral pressures in its leveraged trades, leading to risk reduction efforts by the large asset manager. Ken Griffin, CEO of Citadel, stated in a client letter that more than 100 block trades worth over $4 billion were executed. This action was taken after Citadel acquired the fund assets from Leopold Aschenbrenner. Situational Awareness is an AI-focused hedge fund founded by a former OpenAI researcher, which recently experienced losses in AI-related stock investments and collateral pressures. According to Business Insider, the stock prices of SanDisk and Micron fell by 47% and 29%, respectively, while the fund's high-leverage portfolio dropped by 67%. This incident illustrates how risks can escalate when concentrated investments and leveraged operations occur simultaneously. Citadel has confirmed that it reduced the total risk of the acquired portfolio by over 80% through large block trades to gradually mitigate risk.

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