Citadel Funds Bank Huge Gains on Distressed AI Stock Buy

Three major Citadel funds posted huge gains in July after buying a discounted basket of artificial intelligence stocks from Situational Awareness, a collapsed hedge fund previously run by former OpenAI researcher Leopold Aschenbrenner. The flagship Wellington fund rose 5.9 percent for the month, with almost all of that jump happening right after the purchase. Before the deal, the fund was up a mere 0.45 percent, meaning a single trade delivered more than half of its total returns for all of 2025.

Citadel's other books performed even better. Citadel Equities gained 14.2 percent and Tactical Trading added 11.1 percent for the month. Both funds now sit up roughly 27 percent for the year. This sudden windfall happened because Situational Awareness suffered catastrophic losses when heavy bets on artificial intelligence infrastructure turned sour, forcing major Wall Street banks to demand more collateral. Unable to pay, the fund dumped its public stock book at a ten percent discount, and Citadel stepped in to buy.

This rescue deal mirrors classic moves by Ken Griffin over the last twenty years, such as scooping up distressed portfolios from Sowood Capital and Amaranth Advisors during past market panics. While Citadel secured an immediate portfolio boost, the firm did not sell the shares, meaning it absorbed the heavy volatility that broke its predecessor. Traders will be watching upcoming tech earnings closely to see how these discounted artificial intelligence positions hold up through the summer.