Today, I want to walk through one of the

craziest hedge fund stories that I've

heard of in years. This fund goes from

being one of the hottest names on Wall

Street, managing more than $20 billion,

posting incredible returns, and then

within just a few days, everything

completely falls apart. We're talking

about a guy who's 24 years old. Not long

ago, he was graduating college. 2 years

ago, he got fired from OpenAI, and by

this month, the fund that he built was

reportedly worth as much as $45 billion.

Then, on Thursday morning, it sold its

entire public portfolio. It liquidated

billions of dollars of longs in what one

CNBC reporter called one enormous trade.

And the firm that bought the whole

wreckage had Ken Griffin's Citadel. Now,

here's the thing. There's a clean

version of the story, and then there's

the conspiracy version of the story. I'm

going to give you both here in this

video today. I'm going to be honest with

you about which parts are confirmed and

which parts are people on the internet

connecting the dots on. So, let's get

right into it. For those that don't

know, Leopold Aschenbrenner was a former

OpenAI researcher. Before all of this,

he spent time at the philanthropy arm of

Sam Bankman-Fried's FTX. Yes, the same

FTX right before the collapse. Then, he

joined OpenAI, the company behind

ChatGPT, on their superintelligence

team, the group focused on AI safety. He

was fired in April of 2024. OpenAI said

it was over an alleged information leak,

but he disputes that. Here's where it

gets really interesting. 2 months after

getting fired, he published a 165-page

essay called Situational Awareness: The

Decade Ahead. His bet is that AGI, or

human-level artificial intelligence, is

coming around 2027, and the world isn't

ready for it. And whoever builds the

physical infrastructure for it makes an

absolute fortune. The essay went mega

viral. This essay I read completely over

an entire weekend where I spent 8 hours

reading it. And honestly, it was

something that shocked me as well. It

got taken seriously by tech CEOs and the

investors of the world. And then, he did

a thing that almost nobody does with a

viral manifesto. He turned it into a

hedge fund. Stories like this are pretty

crazy because you think that he would

know something that we don't. And it

definitely seems that way until he makes

a mistake as big as this one day and it

completely changes everything. So

anyways, the people backing his hedge

fund called Situational Awareness LP

were actually very intelligent,

well-known people. We're talking about

Collison brothers who founded Stripe,

former GitHub CEO Nat Friedman, and

investor Daniel Gross. Serious money

took him seriously. And to be fair, for

a while it worked spectacularly. Let's

talk about how the fund actually made

money cuz this is the whole story. The

strategy was pure concentration and AI

conviction. Instead of the obvious mega

cap names, the bets that he was making

on AI infrastructure were absolutely

genius given the AI buildout. The chips,

the memory, the data centers, and the

power. And it seemed like his timing was

just absolutely impeccable. It's like he

could time the market. And he was also

investing in the picks and shovels layer

underneath the whole AI boom. And the

concentration here is wild. According to

public filings, his single biggest

position was Nebius, ticker symbol NBIS,

a pure play AI cloud company spun out of

the old Yandex. And at one point, that

one stock was reportedly around 40% of

his entire portfolio. 40% in one name?

Why would someone this smart, with this

much experience, with this much

connections to, you know, inside people

who work in AI, and has worked in AI

himself, why would he not pay attention

to risk management? Does Leopold

Aeschlimann know something that the

general public doesn't? Well, his other

big disclosed holdings included SanDisk,

ticker symbol SNDX, the memory chip

maker, along with Micron, CoreWeave, and

SK Hynix in Korea. They're all

infrastructure names, all levered in the

same exact insane AI buildout thesis.

That concentration is the fuel, it's

also the bomb at the same time. When

your book is that lopsided, it's all on

the same bet, you don't really have a

portfolio. This is what I talk about a

lot on this channel. Guys, correlation,

it is extremely dangerous to hold

multiple stocks in your portfolio that

are heavily correlated. video exactly on

this coming out tomorrow, because having

multiple stocks does not mean that

you're protecting yourself. Because if

one goes up, the others go up, and you

might look like a genius, just like

Leopold Aeschlimann. He turned a couple

hundred million into many billions of

dollars. In fact, he had $13 billion in

profit, and that was only over a

15-month period. But if one goes down,

well, you can guess what will happen to

the rest. The others go down, too, and

all of a sudden your portfolio comes

crashing down. This is a catastrophic

example of it happening to Leopold

Aeschlimann in real time, right now. We

are witnessing a crash that we have not

really even seen. So, $45 billion,

that's what his fund was reported to

have reached at one point. I actually

heard on CNBC as well. They started this

year at around $3 billion, so the growth

was insane, and they were using options

as leverage as well. And when the fund

launched back in late 2024, it was only

around 225 million. So, look at the

growth up 45 billion dollars. Of course,

you have to be amazing at picking stocks

like he was, but you also have to have

some stacks and serious leverage on top

of that. It also feels to me that he may

have had information that is advantage

information. That's something that I

couldn't get my hands on, and neither

could you. And reportedly, he was

running around four times leverage. So,

going from 3 billion at the start of

this year up to 45 billion at one point,

those are ridiculous gains. But, the

leverage is what made them possible,

which means that when we saw the unwind,

and it has been a huge unwind in AI

stocks over the past month, he got hit

by it very hard and was forced to sell.

CNBC put it like this, "The battered

hedge fund founded founded by former

OpenAI researcher Leopold Bernauer is

unwinding many of its trades after big

losses on artificial intelligence

stocks. A bad against software stocks

left it scrambling to raise cash,

according to people familiar with the

matter." So, it sounds like he was also

shorting the software market, betting

against it. And of course, software has

actually been doing quite well,

especially compared to AI over the past

month. That's a nightmare scenario. You

lose all the long side of the book and

the short side at the same time. So, he

was completely wrong on direction, which

is really confusing since he's been so

right for over 15 months. What would

make him have losing month ever in the

last 30 days basically changes his

entire life story all in the public eye.

The prime broker for the fund, Goldman

Sachs, where I formerly used to work, as

well as JP Morgan and Bank of America,

have been rushing to raise cash to meet

margin requirements. And that's the

mechanism you have to understand here.

When your position starts to lose and

you're leveraged up, the broker may make

a margin call on you because they need

to cover their own behind. So, they tell

you to put up more cash right now or

they sell your positions for you whether

you like it or not. And that is a

tripwire. That's exactly what went off.

Situational Awareness sustained

significant losses in recent weeks as

its portfolio of AI infrastructure

investments such as SK Hynix declined

when short positions in software

companies such as Adobe moved sharply

against them. So, it seems like he had a

big position in SK Hynix as well. This

is company that only recently became

easily available to US investors and

they came in light on earnings and they

came in light on earnings versus what

people were expecting. So, that sell-off

likely contributed to the damage of his

portfolio. Now, SK Hynix is also very

interesting because you guys have

probably watched videos on the Korean

market. People in South Korea have

literally lost their entire life

fortunes including their houses betting

on the Korean market which is very

highly concentrated in just a few

stocks, SK Hynix being one of them. And

we're also going to go into some of the

stocks that he held big positions in

because while this drop-off hit a lot of

chip stocks and a lot of AI stocks

broadly, there were some that got hit

unusually hard and it does seem like he

may have been forced to sell those names

without actually wanting to which made

them decline even further. As we spoke

about, the fund grew to its biggest $45

billion at the start of July before the

big losses took hold. According to all

the research that I've been doing. So,

it just shows you the kind of situation

you can get yourself into if you're

using leverage. This guy was picking

some of the best companies in the entire

world and before Thursday's open on July

30th, it was all over for him. CNBC's

David Faber reported that the fund

exited all of his public investments in

a single block in one enormous trade.

And the buyer, per the Wall Street

Journal, was Ken Griffin's Citadel.

That's a familiar pattern for Citadel,

by the way. Stepping in to scoop up

assets when a leveraged player is being

forced to unwind. He is very

opportunistic, and he's always looking

for a fire sale. They already held some

of the same AI infrastructure names

themselves, which suggested that Griffin

thinks the sector recovers, and he just

has the balance sheet to wait it out.

Ashenbrenner didn't. Ashenbrenner is a

young man, despite making hundreds of

millions of dollars probably on a

personal level, and billions of dollars

for investors, he didn't have the

liquidity. One important clarification,

because there was a lot of confusion

about this. The fund was reportedly

negotiating around its private holdings,

too. A spokesperson said reports that it

was marketing a stake it owns in

Anthropic were not accurate. As it

stands, the private book stayed put.

Situational Awareness still holds its

Anthropic stake, reportedly valued at

around $5 billion. That's likely where

the focus goes for the time being. So,

this is a public equity wipeout, not a

total shutdown. The fund's assets were

reported to be somewhere around $10

billion now, down more than half. The

other big question is how much of the

recent selling pressure was him, because

there are companies here where he owned

massive stakes. Nvidia, for example, he

owned over a 5% position in the entire

company. So, if the fund was being

forced to offload that on the open

market to meet margin, that creates an

enormous amount of selling pressure in

one name. There's also a share in AI

where he owned a huge chunk. The fund's

largest holding at the end of the first

quarter included Nvidia, Sandisk,

Micron, and Palantir, according to

filings, and all four of those were down

more than 35% this month, some even

more. Nvidia, for example, was down 50%

from its all-time highs in just under

two months. That was really, really

rapid selling, and the size of the

fund's losses still haven't been fully

determined. I'm sure we're going to

learn a lot more about in the very near

future. Make sure you subscribe to this

channel because I'm going to be further

covering what's unfolding with this

story and how you can take advantage of

it as an AI investor. People are already

asking how it happened this fast that

over $40 billion at the start of the

month and for that to unwind in a matter

of weeks is a massive blowup. This is

actually kind of embarrassing from

someone who has made so many billions of

dollars. But at the same time, markets

are very volatile and anything is

possible in the market. It can surprise

even some of the best investors. Now,

let's take a look at some of the stocks

that he owned because we're seeing a

massive rebound at the moment. Every

time the stock market falls, there's

many opportunities. So, first off is the

VanEck Semiconductor ETF, ticker SMH.

I've been through this before, but it

basically is a good way to track the AI

sector as a whole. It's semiconductor

stocks as a group. It's up over 6% just

yesterday and I see it as an interesting

opportunity right now given how much

volatility has happened in the market

already and how much of these stocks

have already pulled back tremendously.

There's been a huge V-shaped recovery

and that is in the broad index, not one

individual name. It was down a huge

amount over the past month. It's already

clawed back 6% in a single day. So,

maybe this news contributes to it, but

of course we also had the Fed meeting

yesterday, which now are impacting many

stocks. So, that seem like we've had a

bit of a relief rally on top of

everything. But that's the overall ETF.

If we look at individual stocks he held,

let's start off with Nvidia script. As I

said, he owned over 5% of the entire

company. Nvidia's is up 27% just

yesterday alone and that is absolutely

wild. A company can rally so much in a

single day. It just shows you how much

uncertainty we have in the market right

now and how much volatility. And

uncertainty and volatility is not only

bad, it can also be playing to the

strength and also the exact stock a lot.

Now, this is a stock that I'm investing

in. I still hold Nevius, although I

don't have as many shares as I have

because I ended up selling all of my

shares at actually $208 per share. And

in my challenge, I also bought put

options, so I made money on Nevius going

down. However, I only bought put options

around 250, and I ended up closing it at

240. So, I only played a very short-term

kind of fall in the stock. I did not

foresee it falling as much as it had

afterwards. And there's also Bloom

Energy. This is one of his big plays. He

called Bloom Energy very early, and it

became one of the biggest positions. Of

course, now he's been forced to sell all

of it, and just yesterday it's up 24%

very similar to the other AI stocks in

the market. One of the AI stocks that I

personally own, by the way, is I rent.

That's another stock that was up over

25%. Again, a massive rebound for the

entire AI sector. It really shows you

this guy was on top of the world when it

was coming to calling these investments

and picking these companies. But because

he got over-leveraged and because he

flew a bit too close to the sun, this is

what ends up happening. Nonetheless,

these stocks have seen a huge bounce.

Sandisk is another stock that was up

over 20% yesterday. So, all of these

names are seeing serious rebounds. And

then, we'll finish off with Sharon AI.

This is a much smaller company, only

about $1.8 billion market cap, and it

was one he famously bought into very

early. I think he ended up owning close

to 20% of the entire company. Again, it

looks like he was forced to sell his

assets very, very close to the bottom,

and that is pretty painful because he

most likely did not want to sell there.

But one thing I know for certain is if

you're playing AI stocks right now and

you understand option trading, you know

how to hedge your portfolio, there is a

lot of money to be made. In the link in

my description right now, you can

schedule a free call, and I have three

AI stocks that he owns that I believe

are the best buys right now. If you want

to learn about those three stocks, and

to build a portfolio, and you want to

position your portfolio to capitalize on

this volatility, then schedule a free

intro call into my Discord, learn about

the three stocks, and from there you can

see if you'd like further help, or you

can just implement the three stocks in

your portfolio. No pressure either way.

Go ahead and check that out right now in

the description. There's a lot of

opportunities in this market right now.