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Situational Awareness and the Impending Stock Market Volatility

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Re: Situational Awareness and the Impending Stock Market Volatility

#41

Post by pliny »

HarHarVeryFunny wrote: post #34
cj wrote: post #25

Earlier quoted context omitted.

Looking at their 13f filing (filed in may 2026), they had $8 billion of leveraged put options.

Interesting - I guess at least some attempt at hedging given that they held puts in some of the same stocks they were long on. https://whalewisdom.com/filer/situational-awareness-lp Or perhaps this was more of an attempt to lock in some profits while still riding it higher? It seems most of his puts were in the chip stocks while his portfolio was more focused on "next phase" datacenter/infra stocks.

They had very large put positions on stock that they had very small long stock positions in, I think they were net short in almost everything they held puts on (except the smh etf put which I guess is an attempt to cancel out sector beta)

Re: Situational Awareness and the Impending Stock Market Volatility

#42

Post by anonymousiam »

HarHarVeryFunny wrote: post #31
pliny wrote: post #22

Earlier quoted context omitted.

>Returns like that are not asymmetrical and can only be produced with leverage, at least when you're trading paper. Definitely not true, looking at their last 13f (filed in may 2026) their top3 holdings were BE, SNDK and CRWV which had 1y returns of 1,500%, 2,000% and 500% at the time of the filing. They accounted together for 15% of the fund (plus an unknown amount of exposure through options). These tickers show up…

Sure, but 15% of your portfolio going up by 1000% isn't going to give you an overall 400%+ YTD return, which is where SALP was before this drop, and obviously it is no secret that they were highly leveraged. Aschenbrenner obviously understood diversification, but was overconfident and greedy and used leverage to boost returns. He was lucky that Citadel saw fit to step in and buy their portfolio rather than having to…

Aschenbrenner is 25 years old. How many market upsets has he seen in his adult life?

Re: Situational Awareness and the Impending Stock Market Volatility

#43

Post by ddevnyc »

antasvara wrote: post #36

Just to jump in: Citadel buying this portfolio says nothing about how Citadel feels about the stocks. It's the bread and butter of large HFT hedge funds; if you see someone that has to sell stock, you leverage the fact that you can buy all of it to get a discount versus the asset value. Reports are saying that Citadel was able to buy the portfolio for ~10% under the market value, all at once. That's a no-brainer beca…

Do you believe this might have been Citadel grooming SA to implode like that?

Re: Situational Awareness and the Impending Stock Market Volatility

#44

Post by didntknowyou »

bko wrote: post #7

This fund returned 47% in its first 6m and over 400% prior to the downturn. I don't understand how the investors didn't realize this was going to blow up. Returns like that are not asymmetrical and can only be produced with leverage, at least when you're trading paper. When something is inevitable and there is a large enough position, this makes adversarial attacks likely. Every small drop causes an amplified amount…

hindsight is easy. imagine apple and amazon stock holders thinking the same and selling when stock went up 100% after ipo

Re: Situational Awareness and the Impending Stock Market Volatility

#45

Post by seibelj »

cj wrote: post #25
pliny wrote: post #22

Earlier quoted context omitted.

>Returns like that are not asymmetrical and can only be produced with leverage, at least when you're trading paper. Definitely not true, looking at their last 13f (filed in may 2026) their top3 holdings were BE, SNDK and CRWV which had 1y returns of 1,500%, 2,000% and 500% at the time of the filing. They accounted together for 15% of the fund (plus an unknown amount of exposure through options). These tickers show up…

Looking at their 13f filing (filed in may 2026), they had $8 billion of leveraged put options.

[dead]

Re: Situational Awareness and the Impending Stock Market Volatility

#47

Post by MarkusQ »

intrasight wrote: post #18
ChrisMarshallNY wrote: post #17

"Impending"? Has anyone looked at the Business section, lately?

My first thought as well. My second was the lack of situational awareness.

They could have named the company "Irony", but that would have required situational awareness.

Re: Situational Awareness and the Impending Stock Market Volatility

#48

Post by HarHarVeryFunny »

antasvara wrote: post #36

Just to jump in: Citadel buying this portfolio says nothing about how Citadel feels about the stocks. It's the bread and butter of large HFT hedge funds; if you see someone that has to sell stock, you leverage the fact that you can buy all of it to get a discount versus the asset value. Reports are saying that Citadel was able to buy the portfolio for ~10% under the market value, all at once. That's a no-brainer beca…

I'm assuming that Citadel LLC (the hedge fund) will be able to sell these stocks for a profit, not least because Ken Griffin also owns Citadel Securities which is market maker in most of them, even if he probably can't sell directly to them.

OTOH, perhaps there was also a self-serving element of avoiding market contagion that could have occurred if SALP had instead been forced to sell into the market.

Re: Situational Awareness and the Impending Stock Market Volatility

#49

Post by qurren »

bko wrote: post #7

This fund returned 47% in its first 6m and over 400% prior to the downturn. I don't understand how the investors didn't realize this was going to blow up. Returns like that are not asymmetrical and can only be produced with leverage, at least when you're trading paper. When something is inevitable and there is a large enough position, this makes adversarial attacks likely. Every small drop causes an amplified amount…

> Returns like that are not asymmetrical and can only be produced with leverage

That's not generally true. There are sometimes highly asymmetrical strategies driven by market inefficiences that are not widely known. They're not easy to find though.

Re: Situational Awareness and the Impending Stock Market Volatility

#50

Post by HarHarVeryFunny »

didntknowyou wrote: post #44
bko wrote: post #7

This fund returned 47% in its first 6m and over 400% prior to the downturn. I don't understand how the investors didn't realize this was going to blow up. Returns like that are not asymmetrical and can only be produced with leverage, at least when you're trading paper. When something is inevitable and there is a large enough position, this makes adversarial attacks likely. Every small drop causes an amplified amount…

hindsight is easy. imagine apple and amazon stock holders thinking the same and selling when stock went up 100% after ipo

The problem wasn't just a decline in the stocks - obviously you expect a rocky ride in stocks that are up manyfold in a short period of the time, and Aschenbrenner certainly seems to have had the conviction not to sell early.

The problem was leverage - the decline in these stocks seems to have resulted in margin calls that he could not meet, resulting in forced selling. There was a very brief story that he was looking to raise additional funds, but within 24 hours he had sold much of it to Citadel instead, and for time being now holds an entirely unleveraged stock-only portfolio.

https://www.businessinsider.com/leopold-aschenbrenners-lette...

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