Leopold Aschenbrenner's Fund Faces New Losses After Reinvesting in AI Stocks

Leopold Aschenbrenner, head of the hedge fund Situational Awareness, has returned to the AI stock market following a significant loss earlier this year, but his latest investments are already underperforming. After a historic collapse in July that saw billions wiped from his portfolio, Aschenbrenner's fund began buying AI stocks and leveraged options on tech stocks again, only to see immediate declines.

As of Monday, the six stocks associated with his fund had dropped by as much as 8% since the news of his re-investment broke. This downturn is attributed not solely to Aschenbrenner's actions but also to a broader market sell-off triggered by concerns raised in a viral essay by Anthropic CEO Dario Amodei, which suggested that AI could dominate the internet within a year.

Despite the risks, Situational Awareness had quietly acquired options tied to companies such as AMD, Bloom Energy, and CoreWeave in early September. However, the market reacted negatively, with AMD shares falling from $516.13 to around $486, marking a 6% drop, while Bloom Energy and CoreWeave saw declines of approximately 7% each.

Aschenbrenner's fund had previously utilized high leverage, which contributed to its rapid growth and subsequent downfall. Following the July crash, where AI stocks retraced significant gains, the fund's assets were reportedly bought at a discount by Citadel, leading to a major restructuring. Now, Aschenbrenner is attempting a comeback with a new strategy involving 'flex options' to limit losses, but the timing appears unfortunate given the current market conditions.