Situational Awareness built major Micron and Sandisk positions before July tech rout

Situational Awareness, a hedge fund founded by Leopold Aschenbrenner, had significantly increased its exposure to semiconductor stocks Micron Technology and SanDisk prior to last month's sharp decline in AI-related equities, according to a Bloomberg report. The fund, valued at around $11bn as of June 30th, held substantial positions in Micron and SanDisk, accounting for nearly a quarter of its total assets.

In a strategic move, the fund also decreased its options positions tied to major beneficiaries of the AI boom, such as Nvidia, Broadcom, and Advanced Micro Devices, during the second quarter. This adjustment in the portfolio coincided with a severe reversal in semiconductor and AI-related stocks. Micron's stock dropped by approximately 29% during the July sell-off, while SanDisk plummeted 47%, putting considerable pressure on the fund.

Situational Awareness had become one of the more aggressive hedge funds, heavily betting on the infrastructure supporting the AI boom with significant positions in memory-chip makers Micron and SanDisk. As a result, the sharp decline in July forced the fund to sell public equities, with losses on technology investments accelerating.

Shortly after the fund faced significant losses, Citadel, founded by Ken Griffin, acquired a large portion of Situational Awareness's AI-related stock holdings. Despite making adjustments in the second quarter, including cutting options exposure to Nvidia, Broadcom, and AMD, and increasing holdings in Micron and SanDisk, the fund's portfolio was unable to withstand the subsequent collapse in semiconductor stocks.