Citadel Has Shed Over 80% of Risk From Situational Awareness Portfolio, Griffin Tells Investors

Ken Griffin disclosed in a Friday letter to clients that Citadel has shed more than 80% of the aggregate risk it took on when it purchased the bulk of Leopold Aschenbrenner's Situational Awareness portfolio last month. Griffin said the exit included nearly 100 block trades totaling more than $4 billion in market value, among them the largest intraday block trades of the year in 10 different names. In the United States, Citadel quickly exited the vast majority of the vega risk, with only five remaining positions in G10 carrying a gross market value above $250 million.

Situational Awareness, the AI-focused hedge fund run by former OpenAI researcher Aschenbrenner, was forced into a distressed sale after leveraged bets on semiconductor and AI names including SK Hynix and CoreWeave collapsed, shrinking the fund from a peak of roughly $45 billion to around $10 billion in assets. Griffin said Citadel's ability to distribute the risk was central to its investment thesis, and separately confirmed that his flagship Wellington multistrategy fund returned 5.94% in July, its best monthly performance since 2022. Elsewhere in markets on Friday, the iShares Semiconductor ETF attracted roughly $626.8 million in net inflows week over week, while the Financial Select Sector SPDR and the regional banking ETF KRE saw outflows of 37.5 million units and $198 million respectively.

Energy and materials were the standout sectors, with XLE and XLB among the only S&P 500 sector ETFs hitting 52-week highs and Freeport-McMoRan shares touching an all-time high.