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Citadel Buys Situational Awareness's Stock Portfolio After Big Losses in AI
- d_silin 2mo agoReminds me of LTCM fund story (very smart people X highly leveraged portfolio = a perfect recipe for massive losses on black swan day)
- vzcx 2mo agoLTCM was actually a lot more sophisticated, this fund's thesis was basically "number go up." Count the OOMs!
- furytrader 2mo agoThe irony is that the WSJ had profiled Situational Awareness with a glowing story just 1-2 months ago. It reminds me of my old adage: "You don't want to read about your positions in a newspaper" - it paints a large target on your back.
- darkwizard42 2mo agoI think this is probably true. Allowed for Citadel and others to create a ton of pressure on SA's highly leveraged positions. Always a bigger whale out there with the ability to exert pressure...
- hbcondo714 2mo agoMore precisely, 23 new positions were reported in their latest filing just a couple months ago, most of those being semiconductors: https://last10k.com/sec-filings/2045724 https://last10k.com/sec-filings/2045724
- nrenegar 2mo agoIt should be clarified that a number of those were puts.
- BiraIgnacio 2mo agoI 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...
- darkwizard42 2mo agoIf 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.
- bagacrap 2mo agoI 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.
- mudil 2mo agoSmart men go broke three ways: liquor, ladies, and leverage - Charlie Munger
- reilly3000 2mo agoMy 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.
- bagacrap 2mo agoWhy are the only positions espoused by tech bros cash-in-mattress or QQQ levered up 400%?
- reilly3000 2mo agoI just want to ride out this correction then I’ll be back in my mom-approved mutual fund.
- bagacrap 2mo agoYou 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.
- htrp 2mo agoThe 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.
- bagacrap 2mo agoYes, it's a VC fund now that it has basically no public stocks left.
- tester756 2mo agowhat's the story behind Sit. Awarness?