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Situational Awareness down 67% in July in AI stock rout

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

#181

Post by anon48293 »

animal_spirits wrote: post #125
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…

If you owe someone 10 thousand dollars that’s a big problem for you. If you owe someone 10 billion dollars that’s a big problem for them

That depends entirely on the value of your assets

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

#182

Post by asats »

cmiles8 wrote: post #92
asats wrote: post #10

>Even including July's losses, the fund remains up about 80% on the year Spectacular blowup and a lesson on leverage, but let's not miss this line.

You’re missing the core story which is that they don’t have a returns crisis they have a liquidity crisis. Finds don’t blow up because they have bad returns. Funds implode because they have no cash to cover their calls and other needs for cash.

Nothing I wrote implies that I don't understand that distinction. What I'm saying is that despite this implosion he is still up ytd, so this liquidity crisis shouldn't be interpreted as him/his fund going bankrupt as many seem to want to read it.

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

#183

Post by asats »

windexh8er wrote: post #113
cmiles8 wrote: post #92

Earlier quoted context omitted.

You’re missing the core story which is that they don’t have a returns crisis they have a liquidity crisis. Finds don’t blow up because they have bad returns. Funds implode because they have no cash to cover their calls and other needs for cash.

But that's not what they want to see. They want to see that AI is a savior for all. The psychosis of what AI is, especially in these comment walls, is unfortunately and spectacularly real. Anyone who's done any amount of investment can see this through the lens of history and I'm right there with you. This is the Lehman Brothers stage of the game and SA could be that "one". But Bro, we're still up 80%! - even WSB isn…

Honestly I have no idea what you are even replying to. My comment was essentially "The fund bet big and lost, but don't read it as him going bankrupt" as I saw many people interpret it that way.

I find the emotional charge in your message quite strange, and the "psychosis" might be you projecting something.

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

#184

Post by bagacrap »

energy123 wrote: post #180
bagacrap wrote: post #166

Earlier quoted context omitted.

Yes, he combined one good bet with the ability to charm dumb whales. (Actually this sounds like a lot of startup founders.) And I'm sure he thinks it's still a good bet, but he has no idea what risk management even is. In his letter to investors, he swears he learned his lesson, but I wonder whether that lesson regards leverage, or more broadly hubris.

A lesson learned would be a commitment to quantify the allowed risk as a proportion of VaR or some equivalent approach that holds his fund to account as an investment mandate. Or a promise that he will do something like this in the coming weeks. The lack of specificity of the commitment keeps me sceptical, but time will tell.

Lesson learned would be to hire professionals to do the investing, while he sticks to whatever he actually knows, if anything. (At this point, mainly sweet talking investors, it seems.)

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

#185

Post by bagacrap »

ymolodtsov wrote: post #178
bagacrap wrote: post #165

Earlier quoted context omitted.

It's not just liquidity. Price discovery helps everyone. The earlier the correct price is discovered, the less we're all screwed when the bubble pops. I think they're rewarded too well for the function they serve but whaddya gonna do.

I mean, most of them underperform S&P, at least after fees.

I think on average they match a typical 60/40 portfolio on a risk adjusted basis. The goal is less to out perform long term and more to avoid big downturns (hence "hedge").

I do think there are some firms that have the skill to out-perform long term, but then the average is dragged down by ones like the subject of this article.

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

#186

Post by EvgeniyZh »

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…

He claims 80% ytd profits, and there are speculations that Citadel got their whole public portfolio, so the remaining 10-15b are all private (and marked in unknown way) including ~5b in Anthropic, those who invested early in the year probably still in green (assuming there is liquidity for other private investments, which probably there is given it's AI stuff)

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

#187

Post by swyx »

andy_ppp wrote: post #120
tyre wrote: post #104

Earlier quoted context omitted.

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.

“isn’t worthless” is still to be decided IMO. Until you can sell it it defines worthless!

some people should be too dumb to be allowed to comment on anything

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

#188

Post by swyx »

cmiles8 wrote: post #116
bwfan123 wrote: post #111

Earlier quoted context omitted.

> What could possibly go wrong A barometer of the mania and one for the history books. A 23 year old wunder-kind publishes a 156 page prophesy with a catchy title which was lapped up by the silicon valley elite and funded to the tune of 10s of Billions. And, not sticking to his lane, the wunder-kind enters the finance world thinking his brilliance translates there too, and he was promptly taken to the woodshed by the…

Wall Street eats these types for breakfast and then moves onto another meal for lunch. Once more sophisticated players smelled blood in the water they just had a field day here. There are many more setups out there like this and there’s a whole army of folks just salivating for when they can blow up more AI over-leveraged financial nukes inexperienced and FOMOed investors have assembled.

you guys are acting like he's not still a 23 year old self made billionaire that is not in jail.

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

#189

Post by ymolodtsov »

bagacrap wrote: post #185
ymolodtsov wrote: post #178

Earlier quoted context omitted.

I mean, most of them underperform S&P, at least after fees.

I think on average they match a typical 60/40 portfolio on a risk adjusted basis. The goal is less to out perform long term and more to avoid big downturns (hence "hedge"). I do think there are some firms that have the skill to out-perform long term, but then the average is dragged down by ones like the subject of this article.

Rentech surely exists but you can't become their LP, which allows the median hedge fund to exist, yes.

As for the strategy, that's the idea but all of them market themselves on the returns first and foremost.

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

#190

Post by windexh8er »

asats wrote: post #183
windexh8er wrote: post #113

Earlier quoted context omitted.

But that's not what they want to see. They want to see that AI is a savior for all. The psychosis of what AI is, especially in these comment walls, is unfortunately and spectacularly real. Anyone who's done any amount of investment can see this through the lens of history and I'm right there with you. This is the Lehman Brothers stage of the game and SA could be that "one". But Bro, we're still up 80%! - even WSB isn…

Honestly I have no idea what you are even replying to. My comment was essentially "The fund bet big and lost, but don't read it as him going bankrupt" as I saw many people interpret it that way. I find the emotional charge in your message quite strange, and the "psychosis" might be you projecting something.

You said: "...but let's not miss this line." to the 80%. Strange you think that we should all interpret you as saying "he's not going bankrupt", but OK.

Regardless, it's a scam fund built on sand. Sure, I am following this as everyone else is and my comment is rooted in the ignorance surrounding all of the cyclical financial engineering in broad daylight. This truly stems from the AI psychosis I reference and many industry stalwarts are pointing the finger in this direction as well.

But I truly love your jab at the end, very classy. Yes, I am the psychotic one for thinking that all of the companies targeted in this fund are built on AI revenues that include a huge percentage of funds that they themselves have propped up via investments is rather telling. But hey, this is the world we live in: it's easier to lie and stand with the masses.

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