His 4-To-1 Leverage Just Made His Convictions Worse
Inside Today’s Issue
Essay: Leopold Was Wrong
GenZ “Invests” In Sports
Consumers Tap Out
Uncle Sam Keeps Spending
Chart Of The Day… BWX Technologies (BWXT)
Editor’s note: Today, Porter begins part one of a three-part series on the implosion of Leopold Aschenbrenner’s Situational Awareness fund – and the key reason behind its failure that everyone seems to be missing… We will publish the next Journal this week on Wednesday.
Leopold Aschenbrenner lost $30 billion (67%) in a month.
The consensus post-mortem – from The Wall Street Journal to comments on X – is that the young man who ran the Situational Awareness fund used 4-to-1 leverage on concentrated positions and got carried out. While that is true, it does not convey any useful information. Leverage is certainly the reason Leopold lost so much, so quickly. But it is not the reason he lost. Leverage is merely a magnifying glass. It doesn’t pass judgment.
The reason his fund was doomed was because he’s wrong. And no one, anywhere, has explained why Leopold Aschenbrenner was wrong.
On the morning of Thursday, July 30, before the opening bell, Aschenbrenner’s Situational Awareness sold its entire public stock portfolio – the long side and the short side together, roughly $16 billion of it – to Ken Griffin’s Citadel in a single block trade.
That night, Aschenbrenner wrote to his limited partners. Net performance for the month, unaudited: down 67%. Net performance for the year: still up 80%.
We let you down this month. We came closer to permanent capital impairment than is acceptable to us.
Six days earlier, on July 24, he had written a different letter. That one reported a 439% net return for the first half of 2026, described the selloff in artificial intelligence (“AI”) stocks as one of the best buying opportunities since early 2025, and invited his investors to wire more money starting August 1. It closed with a postscript:
At times we call out opportunities that seem like a particularly good time to add funds, if you have been waiting for one.
Assets that stood near $45 billion at the start of July finished the month around $10 billion, and roughly half of what remains is a single illiquid private stake in Anthropic.
Leopold is 25 years old. He graduated from Columbia University at 19, as valedictorian. He worked at the FTX Future Fund from February to November of 2022, then joined OpenAI’s Superalignment team, then was fired in April 2024. Two months after the firing, he published a 165-page essay called “Situational Awareness: The Decade Ahead,” raised $225 million from Patrick and John Collison, Nat Friedman and Daniel Gross, and started a hedge fund. He had never managed money before.
Situational Awareness was constructed to express exactly two convictions.
