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All in. Market Are we, are we, back? We are definitely back. I think before we get to situational awareness, Charlie, it 's worth bringing up the DI metrics graphs. Because many of the companies we looked at today grew by somewhere between 20-30%. Keel by 30%, Iron by 30%. Basically, every sector in the AI field is just taking off right now.
This, this is madness. You won't find a single major AI data center stock index that hasn't grown by double-digit percentages. I mean, look at this. So, in DI metrics, the data is segmented by sector: memory showed the biggest recovery after the Korean stock market and Korean "dins" were completely crushed, as Ben Pottion talked about yesterday —the entire sector grew by 20%.
I only mean the names: Micron, SanDisk. Absolutely wild. Neoclouds, another sector we partially cover, Neoclouds and PowerShells are up 19% and 17% today. So, Cipher is up 28%, Keel is up 29%, CleanSpark is up 20%... it's just, what's going on? I know what's happening: we've sacrificed Leopold to the gods of the stock market.
Yes, again, PowerShells—the whole sector has grown incredibly. These, these numbers are not for a day, but for a month, it seems. Although no, these are daily changes, not monthly. So if we zoom out, then a month from now—wait, let me look at a month from now— PowerShells are still down 28%. Hyperscalers fell by 10% in a month.
The data storage and photonics sector fell by 35% in a month. A month later , memory still seems to be down 45%. But that doesn't matter. Today we are dining in the halls of Valhalla because everything is just flying. There's a lot of hope now, and we talked about that because , yes, there was a lot of leverage in the system.
Yes, someday, in the future, something is bound to hit a brick wall. But, you know, as Aragorn says at the gates of Mordor: today is not that day. Ahem. Today is not that day. Actually, today is the perfect day for this meme. It really feels that way . Yes, everything just flies away. Oh my God. where we, you know, have a 1% gain per month or quarter, but yeah, it just shows how reactive everything is and how impulsive the market is .
Well, why impulsively? Well, because everyone was fully funded , right up to their very crowns. Yes. So, a child prodigy, a graduate of Columbia University at the age of 19, is also the top of his class. I just realized this, I just found out today. Yes. Um, brother, well, okay, do we want to explain who he is ?
This is, I think, a short, brief biography. He worked at OpenAI as a researcher after graduating from Columbia University. He was eventually fired from the company, according to some sources. And then, two years ago, he founded his hedge fund, Situational Awareness. Which became a favorite of the incredible stories about hedge funds in the traditional finance ecosystem , because they grew by over 400% in the year before this collapse occurred.
Yes. I started with a few million in my pocket, built it up to billions, and in time , I think you'll find a figure of around 40 billion. Another small detail: he is engaged to Avital Balvit, who turns out to be the chief of staff to Anthropic CEO Dario Amodei. And in case you forgot about the legendary traumatic history of cryptocurrencies during the last downturn, Leopold was the investor who led the philanthropic arm of the now- defunct crypto firm FTX.
Wait, really? I did n't know that. Yes. His job before OpenAI was to head the philanthropic arm of FTX. Don't make me wear, don't make me wear my tinfoil hat. The coincidences continue to pile up, but we'll get to the heart of this story. So, this is from a CNBC report. You can just type in "Situational Awareness" and you'll probably find a hundred different articles to choose from.
But the short summary of what happened is this. The hedge fund liquidated its entire position in public stocks, selling them to Citadel, the Wall Street Journal reported this morning. This came to light just before we went live as losses from AI stocks and software short positions were putting pressure on the estimated $20-24 billion under management at the time of the liquidation.
CNBC reports, per your previous comment, Charlie, that the fund peaked in early July at 45 billion before this current drop. So, Citadel became the only buyer again. It absorbed the entire portfolio of Situational Awareness public shares, and this happened after the hedge fund received a demand for additional collateral.
According to CNBC, Bank of America, Goldman Sachs and JP Morgan Chase have been helping funds meet margin requirements or reduce positions in an orderly manner . And on a broader scale , Goldman Sachs and JP Morgan have imposed margin calls on hedge funds holding highly concentrated positions in AI.
So, one thing that I think is important to take into account within this whole event: situational awareness is taking a hit today because they had to eliminate these positions. But the point is , this is part of a larger story where these credit hedge funds that were betting on AI, if they ended up on the wrong side of leverage, were getting margin calls, are either in the process of being liquidated or were liquidated during this meltdown.
Isn't that right ? So it's too early to draw conclusions, but we could just see a massive deleveraging, which would be , by all indications, if it's substantial enough, a bullish signal for the rest of the quarter. It increasingly seems like we just had a pretty harsh deleveraging , as this story suggests.
So, a few key points before I hand it over to you, Charlie, for some interesting conclusions. They have a stake in Anthropic, and according to a CNBC report, it hasn't been touched. The Situational Awareness team, their spokesperson specifically told CNBC that they did not sell a stake in Anthropic, but CNBC noted that it is unclear whether this is indeed the case, but at least it is a matter of dispute.
So for now, all we know is that their public positions or positions in public companies have been liquidated. Now CNBC names the largest assets as of the latest report they did with inside sources as Nebius Group, SanDisk, Micron, and CoreWeave. SanDisk and Micron, and these are direct positions. These are not derivative positions like puts or calls.
And that would make sense in terms of liquidation at this point, as Sandisk and Micron were crashing this month. So if you look at that and think they had big positions there that could have weighed on the entire portfolio, in fact all four, as CNBC points out, are down more than 35% this month. As of the end of the first quarter, the most recent report we have from them is dated approximately May 19th.
Their Form 13F to the SEC. Their largest assets or largest new positions are VanEck Semiconductor Trust, which is also having a very tough month, with 2 billion , Nvidia with 1.6 billion. Uh , this is a new position, but it combines with puts on Nvidia, which was the main asset, and Oracle for 1.07 billion.
So, in the end, Leopold and Situational Awareness were eliminated. They are currently at a pit stop: they are changing their wheels and checking their oil. Although they are trying to raise funds. They're probably trying to completely cleanse their brains. I mean, their brains are already exhausted.
They're...yeah, I mean, if they're in the workshop, right now they're, you know, bent over a pile of tires. This...this is Ken Griffin. He now owns their portfolio. And this is typical Ken Griffin play. Suddenly someone is heavily indebted, someone has overestimated their strength. Who knows where the final stop is?
Who is the real " predator" in the American market ? This is Ken Griffin and Citadel . So, again, putting on the conspiracy theorist hat: the entire market has essentially started copying Leopold Aschenbrenner's trades over the past two quarters. I started doing that a little myself. Because the guy was just winning, and he was married or about to marry the supposed head of the Anthropic apparatus, which was something of an open secret, and everyone assumed he just had inside information.
I mean, he was fired from OpenAI for sharing insider information. What will this young, impulsive guy not stop doing? Especially if he has "input" into the most discussed, closed and mysterious company that everyone is talking about, he must continue to do so. So, again , this is just a guess. I say this, intuitively feeling what other people have also, in essence , already said.
Although I'm not surprised that Ken Griffin is here to pick up the pieces. Whether this is opportunism, a deliberate act, or a coincidence—we don't know. It wouldn't surprise me. I wouldn't be surprised if Leopold became a kind of standard bearer for many people who took out loans. And, perhaps, Situational Awareness is simply the most notable example of those who went bankrupt, and now even more other "bodies" are surfacing due to copy trading.
So I wouldn't be surprised if we saw others come to the surface, but it's almost like, if you see a sperm whale come to the surface, you probably won't notice all the other small fish that come to the surface too. Yes. My question for the future, Charlie: They're trying to raise new capital to restart the fund.
Will people trust Leopold's situational awareness again, dare I ask? You know, it's classic: fool me once, shame on you, fool me twice, shame on me. I assume there is a pretty high chance that they will raise capital again. I bet they ...Yeah, but Yeah, but I mean, well, what's , what's your opinion?
Do you think that, do you think that his star has risen as high as it could? She was at her zenith, and now she is at her nadir. Do you think they might come back, but they won't be as visible as before? Um, I think the mystique and mystery will disappear because everyone understands: oh, he was just winning at the right time and had all the situational awareness, if you will.
But, uh, I bet he'll get another chance at success. I mean, the thing is, he was right at the right time and he was convinced of it. So the irony is that it was driven by hubris and risk, but it's a consequence of something that could have been solved through position size. So if you can slow down a little bit, if you think this deal, the AI trade, has room to grow, Leopold probably has good inside information.
I mean, will people stop messaging him , you know, before announcing their deals? Because apparently he still has everyone's numbers in the industry. And his essay "Situational Awareness" was generally correct and remains so. He actually says that a few years ago there were a few hundred people in Silicon Valley who had a complete vision of the entire field, and it's really a closed group that you're not in.
And it's becoming more and more apparent every day that it's a small group of people with great insight and influence who actually control the entire market. It's not like , you know, calling it a conspiracy. I'm just saying that the fact that's driving the entire stock market right now was a niche thing two and a half to three years ago , and now they're all running multi-billion dollar companies approaching trillion dollar capitalization.
So, just the fact that a few engineers are now, so to speak, running the machinery of the American and global economy, I predict that he will get another try. Ahem. My main question for the last time, Charlie, before we finish with this topic: what is left of what was sold? Do we know? No, I don't know, it wasn't in the reports.
So, after meeting margin requirements and closing out everything else they needed to , how much did their positions depreciate, beyond what they had already lost in nominal value , given the state of the stock market and how much those positions had sagged, and what was left anyway? Do they have it, because you assume that something must be there.
They were up 430% year-over-year, with high volumes at one point. Yes. And what's left? We can assume that there are several billion dollars left there. Apparently, it's just being returned to the limited partners ( LPs) in the fund. Well, I suppose so. Or we'll see. I don't know what will happen next.
Like, you come to investors and say, " Hey, you can take your money back or let us try again, you know?" But certainly from my perspective, Charlie, this is one of the craziest stories of the year, especially because after liquidating that position, everything, including the assets they had, skyrocketed.
So Ken Griffin and Citadel look like geniuses now because they bought this portfolio at a discount. Add that to the list of other things they've done over the years that make them look like geniuses. You know, people on the internet might remember, and we talked about this before the show, Ken Griffin is a real boogeyman.
the ultimate arbiter of Wall Street Bets, being essentially the entity that Wall Street Bets couldn't eliminate, and who then, so to speak, called everyone home and said, "Yeah, your little online populist movement actually belongs to me." Now Ken Griffin is building the largest palatial estate in American history, either on Long Island or somewhere in Florida.
I don't know where, probably both there and there. But Ken Griffin is now , you know, he's the boss of the people whose names we know. So... and one quick note: remember when GameStop announced their Bitcoin strategy? What happened to this? I feel like Kermit the Frog looking out a rainy window, you know ...
I miss, I miss those times. Okay, I think we can put that aside and move on to profits. Yes, CleanSpark is a market-leading data center developer with a successful track record.
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