Situational Awareness got the future right but misread the past

AI-focused hedge fund Situational Awareness was exploring the potential sale of stakes in privately held technology companies prior to agreeing to transfer most of its public equity portfolio to Citadel, reports Bloomberg. The firm, established by a former OpenAI researcher, contacted venture capital firms like Sequoia Capital and Greenoaks about acquiring some of its private holdings in a bid to generate liquidity amid increasing pressure from margin calls.

However, these discussions did not culminate in a deal as Situational Awareness ultimately settled with Citadel to dispose of the majority of its publicly listed equity portfolio, thus providing a different avenue for liquidity. While Anthropic was reportedly among the assets under consideration during these liquidity talks, no sale was finalized.

Sequoia Capital and Greenoaks, existing investors in Anthropic, were approached due to their familiarity with the company and the wider AI investment landscape. This week, Citadel announced plans to acquire the majority of Situational Awareness’ public equity portfolio, encompassing positions financed through leverage from prime brokers.

This transaction allowed the fund to circumvent selling its private investments, enabling it to maintain ownership of strategic AI assets while markedly decreasing its exposure to publicly traded equities.