Leopold Stays in the Game, Big Tech Earnings, OpenAI Slashes GPT-5.6 Prices

Leopold Aschenbrenner's Situation Awareness fund lost 67% in July, sold its public equity book to Citadel in a block transaction, and is still up 80% year-to-date. The letter he sent to limited partners is being called the new "billion dollar PDF" — a masterclass in crisis communication from a 28-year-old hedge fund manager who came closer to permanent capital impairment than he found acceptable, but who insists the fund is not shutting down, not liquidating, and not transforming into a private-only vehicle.

The Blow-Up That Wasn't

The core facts from Aschenbrenner's letter are straightforward. The portfolio experienced a significant drawdown over July, exacerbated by extreme moves in core positions during the final week. Many AI names drew down by half or more, while the fund's positive long-short spread "reversed violently." As these moves proceeded, Aschenbrenner says the fund started seeing "increasingly adverse trading in names publicly associated with us" — the dynamic Martin Shkreli described as blood in the water, where counterparties intentionally apply downward pressure on a struggling fund's positions.