This is WILD! Leopold Aschenbrenner built one of the most concentrated, leveraged AI bets on Wall Street, it blew up spectacularly and the firm that bailed him out just finished cashing in on the rebound it arguably helped set up. The pie chart shows Situational Awareness holding $20.2 billion in disclosed US equities as of June 30, 2026, up 48% quarter over quarter, but this is a snapshot of past positioning, filed weeks after the portfolio had already collapsed. More than 55% of the entire book sat in just two memory chip names, SanDisk at 28% ($5.7 billion) and Micron at 27.5% ($5.6 billion), an extraordinary concentration for a fund managing tens of billions. The remaining bet was on Bloom Energy at 9.6% ($1.9 billion), TSMC at 6.4% plus $24 million in calls, Nebius at 6.1% ($1.2 billion), CoreWeave at 3.7% ($745 million), and smaller stakes in Core Scientific, IREN, Applied Digital, and STMicroelectronics, plus a $5 million put on Applied Digital, suggesting Aschenbrenner was simultaneously long the AI power/hosting theme while hedging pieces of it. Reports show that the fund was running leverage up to 4x and when AI related and semiconductor names sold off sharply in July, the portfolio lost roughly 67% of its value in a single month, collapsing from a peak near $45 billion to about $10 billion. Citadel had published a report suggesting the Fed would likely raise rates and that Citadel along with other hedge funds then shorted the market into that narrative, a combination of pressure some claim directly contributed to bringing Leopold's fund down. Facing margin calls it couldn't meet, Situational Awareness was forced to sell essentially its entire leveraged public equity book, SanDisk, Micron, and the rest, to Ken Griffin's Citadel in late July reportedly 40 to 50 cents on the dollar. Here's where it gets messy. On August 11, roughly two weeks after absorbing Aschenbrenner's distressed portfolio, Citadel Securities derivatives strategy head Scott Rubner published a note telling clients the leverage reset has largely run its course and that systematic buyers were preparing to reload on the exact type of high beta semiconductor names that had just been liquidated, citing leveraged ETF assets crashing 42% and semiconductor linked leveraged ETFs shrinking to just $31 billion. Then this week, Griffin disclosed Citadel had already shed more than 80% of that risk through over 100 block trades worth more than $4 billion. Citadel's own desk was warning the market of further liquidation risk in the names it had just bought cheap, then two weeks later called the bottom and told clients to buy, then quietly sold the bulk of its own distressed stake into that exact rebound it had just publicly hyped. This is why some of your favorite AI names like Nebius, Micron, and SanDisk got crushed even though the underlying thesis never changed. The selloff was not necessarily the market suddenly deciding AI infrastructure was overvalued, it was a massively leveraged fund being forced to dump billions of dollars in stock at the worst possible time. Wall Street did not panic with you but rather bought those distressed shares for pennies on the dollar, helped fuel the rebound, and then sold them right back to the market at a profit. if you enjoyed reading this make sure to follow @MelvinInvests for more AI and market insights.