Citadel sheds over 80% of aggregate risk from Situational Awareness portfolio

By Anirban Sen and Arasu Kannagi Basil

Aug 21 (Reuters) – Billionaire investor Ken Griffin’s Citadel has shed more than 80% of the aggregate risk from the original portfolio of Leopold Aschenbrenner’s Situational Awareness, which it recently purchased, according to a letter sent to investors that was seen by Reuters on Friday.

Situational, an AI-focused ‌hedge fund run by former OpenAI researcher Aschenbrenner, sold the bulk of its stock bets to Citadel last month after heavy losses in its tech holdings forced it to unwind most of its public equities portfolio.

Citadel has since completed nearly 100 block trades totaling more than $4 billion in market value as it trimmed the risk from the portfolio. The firm declined to comment.

“Our ability to distribute this risk was central to our investment thesis,” Griffin said in the letter, adding that the moves included the largest intraday block trades of the year in 10 different names.

Citadel, which has about $77 billion of assets under management, is one of the world’s most profitable and largest hedge funds. It has built a reputation for seizing opportunities during periods of market dislocation.

Griffin and his top lieutenants had pulled an all-nighter ​to analyze the trading book positions of Situational and how liquid the bets were, Reuters reported last month.

“A transaction of this magnitude could not have been completed without the extraordinary cooperation of the trading and prime brokerage teams at the banks serving both firms. I am grateful for the focused effort they brought to the rapid transfer of the portfolio,” Griffin said.

Citadel Wellington, the firm’s flagship multi-strategy fund, gained 5.94% in July, leaving it up 12% for the year.

(Reporting by Arasu Kannagi Basil in Bengaluru and Anirban Sen in New York; Editing by Shilpi Majumdar)