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Situational Awareness down 67% in July in AI stock rout

wsj.com

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Re: Situational Awareness down 67% in July in AI stock rout

#101

Post by jghn »

infecto wrote: post #91
axus wrote: post #88

Earlier quoted context omitted.

Because Hacker News appreciates discussion of the theoretical, that exceeds the bounds of what mainstream society thought was possible.

[flagged]

What I was specifically pointing at was it being a heavy AI play combined with the direct relationships he has at high levels with AI companies. For instance the chief of staff to Anthropic's CEO.

What I was specifically referring to was a hypothetical that he could need a pardon. There was a question on what possible crime could be involved.

All that said, I'd imagine if this was really happening that we wouldn't have today's headline in the first place.

Re: Situational Awareness down 67% in July in AI stock rout

#103

Post by energy123 »

He played his cards well given the incentives. Most investors wouldn't tolerate such recklessness, and accordingly, most funds have to operate under strict risk management or they don't get funded. PMs at multi managers are only allowed about 5-8% drawdowns.

Leopold's public visibility gave him access to dumb money whales who allowed him to personally profit off the variance by collecting bonuses when times were good, leaving the investors with the bag when the blow up happens. These investors got lucky that there were still gains after the margin call. Being up 80% after such a large drawdown is bad performance on a risk adjusted basis and is not distinguishable from chance due to the magnitude of the variance.

Re: Situational Awareness down 67% in July in AI stock rout

#104

Post by tyre »

vessenes wrote: post #3

This is everywhere. For reference, former FTXer and OpenAIer raised $225m into a hedge fund structure, went long and short, and reportedly peaked at $40bn of value; leverage bit hard this week and they sold their entire-ish portfolio to Citadel at $10bn. (Which, I imagine was very likely aiming at this outcome in their trading in the last few weeks). Not reported anywhere -- was additional money raised in to the fund…

You’re talking about the same fund.

They were open about their gains. It was the margin calls and illiquidity that got them, not going negative. Some of their assets, like Anthropic stock, isn’t worthless, it’s just illiquid.

Re: Situational Awareness down 67% in July in AI stock rout

#105

Post by chollida1 »

chaos_emergent wrote: post #100
chollida1 wrote: post #73

Earlier quoted context omitted.

> let's be clear here - he didn't actually "lose" a ton of money. he was up 439% net in the first half of 2026. He's down 67% on the month. He most certainly lost alot of money. He'll be fine and i think he'll be successful at raising more money, and he's still up on the year as far as I've been told by LP's, but he sure did lose alot of money this month.

Aren’t month over month gains and losses aren’t particularly surprising nor noteworthy when you’re operating a leveraged fund? Shouldn’t one expect higher volatility, but also higher returns?

yes, monthly returns are expected to be volatile for a fund like this.

No in that, no LP wants 2/3rd down months. That kind of swing is insane.

That' means any LP that invested in the past 3 moths is completely wiped out, as in their full investment into the fund is at zero.

Now most LP's are probably investors for 6 months or more so they'll be ok.

What I'd be worried about is that if its true that he liquidated his entire public portfolio and only holds privates, where are the returns going to come from when anthropic is currently valued at what it is likely to go public at, and where is investor liquidity going to come from when they want to redeem.

He looks like he's turning his fund into a venture capital fund, which might be for the best given that he seems good at that and poor at running a hedge fund that invest in public securities.

Re: Situational Awareness down 67% in July in AI stock rout

#106

Post by forgetfreeman »

cmiles8 wrote: post #68

An inexperienced portfolio manager that’s never seen a down tech market in his life has created a massively leveraged position on frothy assets in a bubble and the bubble is looking ill. What could possibly go wrong. Many of these AI plays are massively entangled and leveraged. It all looks good until it doesn’t and when there’s a hiccup things unravel quickly and exponentially. I fully expect in the next 12 months w…

I'd be excited for the show myself if I had any idea how to prevent my portfolio from tanking when this clusterfuck finally unravels.

Re: Situational Awareness down 67% in July in AI stock rout

#107

Post by forgetfreeman »

literalAardvark wrote: post #53
malfist wrote: post #12

Earlier quoted context omitted.

Why are you promoting content by Martin Shkreli? You know, the guy who committed securities fraud to rip off desperate patients?

Because hn is primarily about competence, knowledge and tech, which Martin has in spades. The arguments against him barely hold water in general anyway.

So competent sociopaths get their roses on HN? Good to know.

Re: Situational Awareness down 67% in July in AI stock rout

#108

Post by bwfan123 »

Deja-vu from dot-com. The tech-wreck had similar hedge-fund road-kill. Munder net-net fund comes to mind. A lot of hubris and leverage on a thesis that is not proven, and liquidity matters. Data-center debt will likely see similar debris in the next several years.
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