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Citadel Buys Situational Awareness's Stock Portfolio After Big Losses in AI

wsj.com

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Re: Citadel Buys Situational Awareness's Stock Portfolio After Big Losses in AI

#11

Post by darkwizard42 »

BiraIgnacio wrote: post #8

I didn't know buying other funds stock portfolio was even a thing. TIL I guess it makes sense, wondering what Citadel will do with it...

If you are a supergiant like Citadel you can simply acquire positions which are so large they are the equivalent of someone's portfolio (or put another way, Citadel sees a huge block of equities packaged up, looking to move and bids on it).

It would be like if you needed to acquire 100M shares of Apple -- usually a broker will fill that large of an order from several sources OR if some fund has the full liquidity, it can be filled from that single position (and thus acquiring the fund's portfolio position). Now repeat this for their ENTIRE portfolio.

Re: Citadel Buys Situational Awareness's Stock Portfolio After Big Losses in AI

#12

Post by htrp »

The SA Story is essentially an AI researcher who left OpenAI's superalignment team, published a series of viral blog posts, raised capital for a hedge fund, and capitalized on the semiconductor boom over the last two years.

They used aggressive leverage and when the semiconductor sector corrected sharply, they faced catastrophic margin calls.

What's left is $10 billion in AUM primarily tied up in a $5 billion private stake in Anthropic and various other AI company holdings, the firm effectively operates as a venture capital fund rather than a traditional hedge fund now.

Re: Citadel Buys Situational Awareness's Stock Portfolio After Big Losses in AI

#14

Post by bagacrap »

reilly3000 wrote: post #10

My 401k is all money market right now. I did that immediately after reading the HF blog post specifically about how GLM 5.2 helped them out when they had refusals from closedai. The value is in all in the future utilization of inference infrastructure profitably. The margins collapse when models are commodities and they really need to be. This is going to be one hell of a ride.

Why are the only positions espoused by tech bros cash-in-mattress or QQQ levered up 400%?

Re: Citadel Buys Situational Awareness's Stock Portfolio After Big Losses in AI

#15

Post by bagacrap »

htrp wrote: post #12

The SA Story is essentially an AI researcher who left OpenAI's superalignment team, published a series of viral blog posts, raised capital for a hedge fund, and capitalized on the semiconductor boom over the last two years. They used aggressive leverage and when the semiconductor sector corrected sharply, they faced catastrophic margin calls. What's left is $10 billion in AUM primarily tied up in a $5 billion private…

Yes, it's a VC fund now that it has basically no public stocks left.

Re: Citadel Buys Situational Awareness's Stock Portfolio After Big Losses in AI

#16

Post by bagacrap »

BiraIgnacio wrote: post #8

I didn't know buying other funds stock portfolio was even a thing. TIL I guess it makes sense, wondering what Citadel will do with it...

I think it's mainly because if SA sold that much on the open market it would crash the stocks even further. Citadel is large enough to buy the entire book at a nice discount while still protecting the market from additional volatility and the fund's investors from even worse losses.

Re: Citadel Buys Situational Awareness's Stock Portfolio After Big Losses in AI

#17

Post by reilly3000 »

bagacrap wrote: post #14
reilly3000 wrote: post #10

My 401k is all money market right now. I did that immediately after reading the HF blog post specifically about how GLM 5.2 helped them out when they had refusals from closedai. The value is in all in the future utilization of inference infrastructure profitably. The margins collapse when models are commodities and they really need to be. This is going to be one hell of a ride.

Why are the only positions espoused by tech bros cash-in-mattress or QQQ levered up 400%?

I just want to ride out this correction then I’ll be back in my mom-approved mutual fund.

Re: Citadel Buys Situational Awareness's Stock Portfolio After Big Losses in AI

#18

Post by bagacrap »

reilly3000 wrote: post #17
bagacrap wrote: post #14

Earlier quoted context omitted.

Why are the only positions espoused by tech bros cash-in-mattress or QQQ levered up 400%?

I just want to ride out this correction then I’ll be back in my mom-approved mutual fund.

You can't predict when SPY is gonna correct or by how much. When capital leaves the AI trade it will just flow back into boring stocks. DJI is up MOM 4 months running.
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