Wellington, Ken Griffin's flagship fund, sat flat through most of July. Then Citadel bought a distressed AI stock portfolio from Situational Awareness, the collapsed hedge fund run by former OpenAI researcher Leopold Aschenbrenner. The fund jumped 5.45 percentage points in the final weeks. It finished the month up 5.9%.
The scale matters. Wellington returned 10.2% across all of 2025. One deal in July delivered more than half that gain. The fund is now up 12% for 2026, already beating last year's full result with five months left on the calendar.
Citadel's other two funds did even better. Equities gained 14.2% and Tactical Trading added 11.1% in July alone. Both now sit near 27% year-to-date, compared to 14.5% and 18.6% for all of 2025. Whale Rock's flagship fund moved the other way, dropping 21.7% in July and erasing roughly half its 2026 gains.
How Situational Awareness Imploded
Situational Awareness peaked near $45 billion in early July. Weeks later it held about $10 billion. The fund had borrowed heavily, running use as high as four times its own capital. That magnified every move. It bet on AI infrastructure and against software. When chip and memory stocks slid, small losses turned large fast.
Main holdings each fell more than 35% during the month. Goldman Sachs, JPMorgan Chase and Bank of America then demanded more collateral. The fund could not meet those calls. It sold its whole public stock book, and Citadel took that leveraged equity portfolio at roughly a 10% discount. The forced selling stopped. The same stocks bounced. Citadel already owned them.
This playbook is not new for Griffin. In July 2007, Sowood Capital lost half of its $3 billion in under a month. Citadel bought its positions and profited as markets recovered. The pattern repeats. use breaks. Collateral calls hit hard. Forced sellers dump quality assets at fire-sale prices. Citadel waits and collects.
This material is for information purposes only and should not be construed as investment advice or a recommendation to buy or sell any security.
