Situational Awareness wasn’t the only one that had a bad July. Hedge funds took a historical hit last month

Altimeter Capital Management's hedge fund saw an 11% loss in July, joining a trend of significant double-digit declines in investment firms as a reversal of fortunes hit AI-related stocks, according to Bloomberg. The technology-focused firm, which operates across public and private sectors, suffered a double-digit loss after previously reaping substantial benefits from the AI-driven rally earlier in the year.

Despite the setback, Altimeter remains up 34% for the year. The fund's portfolio is relatively concentrated, with Taiwan Semiconductor Manufacturing Co and CoreWeave as its largest holdings, both of which plummeted in July amid concerns over AI infrastructure spending and reduced semiconductor exposure. The market correction also impacted leading multi-strategy hedge funds, with Balyasny Asset Management down 1.5% and Verition Fund Management down 1.1%, while ExodusPoint Capital Management fell 0.9%.

However, Citadel's Wellington fund stood out, gaining 5.9% in July due to its acquisition of discounted AI-related positions post its liquidity crisis. The downturn was particularly severe for managers heavily invested in AI and semiconductors, exacerbated by investors questioning the sustainability of AI infrastructure investment.

The market correction followed an exceptionally strong first half for the hedge fund industry, with an average return of 7.4% through June, according to PivotalPath data.