Submitted by QTR's Fringe Finance
Today let me offer up one of my patented periodic reminders to do your own work.
As many have already pointed out, there was something almost too neat about Citadel’s timing before the Situational Awareness blowup. In late June, Citadel Securities published a market-structure review warning that U.S. equities had become unusually concentrated, that investors were increasingly expressing bullishness through leverage, and that leveraged exposure was piling particularly aggressively into technology and semiconductors. They also warned of a rate hike possibility.
Leveraged ETF assets had reached roughly $218 billion; semiconductor exposure in those products was up 175% since the end of March. Financing was getting more expensive too. It was not a prophecy about one hedge fund, but it was a pretty good description of the tinder.
Then July supplied the match. Situational Awareness, the spectacularly successful AI fund run by Leopold Aschenbrenner, got caught in the semiconductor selloff with a leveraged and concentrated book. Its portfolio fell 67% in July. Margin pressure followed, most of the public-equity portfolio had to go, and the fund that had looked like a genius machine suddenly discovered one of finance’s oldest technological breakthroughs: the margin call. Aschenbrenner did what, in my opinion, all market cowards unable to accept responsibility do: blamed short sellers. (Read: READ MORE AT SOURCE »
« Back to The Culture War
