Two numbers in one letter

Leopold Aschenbrenner's fund, Situational Awareness, told investors in a letter that its portfolio fell 67 percent in July. The same letter says the fund is still up 80 percent since the start of 2026. It sold the bulk of its stock portfolio to Citadel this week and removed leverage entirely. One month took most of a year's gain, and what remains is carried on equity rather than on borrowed money.[1]

The second half of the letter is the more distinctive part. Aschenbrenner wrote that "we let you down this month" and that the fund came dangerously close to impairing its capital. In the account reported by Reuters, the loss is attributed to a steep decline in AI stocks arriving at the same time as market liquidity dried up. For a fund founded in 2024, that is less a statement about where prices went than about how narrow the exit was.[1]

When the seller sets the price

A 67 percent monthly fall sitting next to a preserved 80 percent gain for the year points to two different stories, and the difference matters. Removing leverage entirely and moving the bulk of the portfolio to a single institution at once looks less like an investor changing their mind and selling down in stages than like an unwind imposed by financing. The competing explanation is available too: the holdings may genuinely have been repriced, and the sale may have been a deliberate decision to shrink a concentrated book. The letter does not settle the question; what will settle it is who comes in to buy the same shares, and when.[1]

There is a way to make the distinction observable. If July's loss was mainly a financing event, the return on the now-unlevered portfolio should track the same shares from here and the gap should close; if the assets themselves were repriced, it will not. The way to watch that is the return figure in the fund's subsequent monthly letters together with the disclosed size of the portfolio transferred to Citadel. By the end of October those two pieces of data should show whether July was a leverage accident or a judgment about value.[1]