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bko 3 hours ago [-]
This fund returned 47% in its first 6m and over 400% prior to the downturn.
I don't understand how the investors didn't realize this was going to blow up. Returns like that are not asymmetrical and can only be produced with leverage, at least when you're trading paper.
When something is inevitable and there is a large enough position, this makes adversarial attacks likely. Every small drop causes an amplified amount of pain to the investor which causes them to liquidate positions furthering the decline. SA doesn't have the history or relationships yet to endure margin calls.
I don't see the edge these companies have when they're just going long a very particular position, namely anything related to AI. Long term value in finance is made in a couple of ways. For instance, relationships & being able to source deals (lots of PE firms), short term trading infrastructure and knowledge (Renaissance), capital and clout to make favorable deals (Buffet), etc. Even then the skills are fleeting as employees leave taking knowledge and companies raise money to compete.
Buying Nvidia on leverage is not a long term strategy. Especially when all your investments are common stock and obvious.
pliny 45 minutes ago [-]
>Returns like that are not asymmetrical and can only be produced with leverage, at least when you're trading paper.
Definitely not true, looking at their last 13f (filed in may 2026) their top3 holdings were BE, SNDK and CRWV which had 1y returns of 1,500%, 2,000% and 500% at the time of the filing. They accounted together for 15% of the fund (plus an unknown amount of exposure through options). These tickers show up in the 2 and 3 previous filings so they had exposure to some of that run up, and looking at the filings further back they had some very concentrated exposure to INTC in a half year period where the stock went up about 200%
cj 12 minutes ago [-]
You could say "only produced with leverage or [the equivalent of trading penny stocks]"
Obviously they're not penny stocks, but they're behaving like penny stocks. And those tickers had less than a $10 billion market cap before 2026. Which is very small for a $45 billion fund.
The point is what quickly goes up can quickly go down. Leverage produces that effect. As does investing in tiny volatile small cap companies.
(Did the 13f not have any mention of option trading?)
anonym29 2 hours ago [-]
>This fund returned 47% in its first 6m and over 400% prior to the downturn.
>Returns like that are not asymmetrical and can only be produced with leverage
This is simply untrue. Just because the path to doing so is much more clear in hindsight doesn't mean it wasn't possible.
Sandisk is still up 110.82% in the last 6 months, and that's after a drawdown that's now approaching 50% from peak. Over the last year, they're up 2730%, and again, this is after the drawdown. Zero leverage.
gizajob 2 hours ago [-]
The skill in the stock market, and the value of any kind of investment fund, is producing good returns over an actual long-term period. YOLO-ing once before imploding in one of the biggest bull markets ever can be done by any gambling degenerate out there.
anonym29 41 minutes ago [-]
I don't disagree at all with what you're saying, but it has nothing to do with what I said, which is strictly a refutation of the assertion that it's only possible to achieve a 47% return in 6 months or 400%+ return in ~2 years with leverage.
It's also worth noting that this wasn't a total implosion, as Situational Awareness is reportedly still up over 80% YTD even after the unwind, and kept their Anthropic stake.
HeyBigE 37 minutes ago [-]
Uhhh.. you think this isn't driven by options trading? Which is, by definition, leverage.
All the stuff that it was forced to sell to Citadel is also up ~10%-30% since the sale
drexlspivey 1 hours ago [-]
The public book went to 0 and LPs lost everything. The 80% number is a result of blending the Anthropic stake (+620% YTD, 25% of NAV) and the public book (-100%, 75% of NAV) = +80% YTD
48 minutes ago [-]
blitzar 57 minutes ago [-]
> All the stuff that it was forced to sell to Citadel is also up ~10%-30% since the sale
and Citidel took it all at a multiple billion dollar discount to the prior close
trash_cat 2 hours ago [-]
"The forces that destroyed SA were also what generated its 4×+ return"...yes, that is what levrage means? And it goes both ways.
The interesting part what this article states: SA was essentialy a thematic ETF without any hedging to buffer downside, and got margin called.
1 hours ago [-]
lz400 3 hours ago [-]
I think the collapse of SA is very simple (as long as I'm not wrong about it of course hehe).
SA weren't geniuses, they weren't sophisticated. They just did the same thing everyone else did, all in on semi-conductor, AI and memory positions. They got great returns because 1) everyone got great returns and 2) they were leveraged through their ears. In fact, not only they weren't geniuses, they were pretty bad at risk management, so bad that the first mild drawdown triggered margin calls on their over-leveraged bets and they couldn't cover them.
TLDR: SA didn't have alpha, they just looked good through over-leveraged beta and got caught
jfrbfbreudh 3 hours ago [-]
They were the alpha. Leopold called the boom in 2025 and returned 200% in 2025.
He unfortunately got caught with his pants down.
lz400 2 hours ago [-]
I mean, so many people also went in on the boom, that's why it's a boom. Leopold somehow got it 100% right and _still_ managed to go bust
blitzar 56 minutes ago [-]
That was just leveraged beta.
wiejee 2 hours ago [-]
[dead]
ChrisMarshallNY 1 hours ago [-]
"Impending"? Has anyone looked at the Business section, lately?
intrasight 1 hours ago [-]
My first thought as well. My second was the lack of situational awareness.
Yummiy 6 hours ago [-]
How does it actually work under the hood?
m101 4 hours ago [-]
Michael Burry's substack answers this in his articles over the last week. It's along the lines of there are a number of market players that are taking on similar position in the market. These market players use leverage. Because of how many players there are, and the different levels of leverage involved, if the market goes against these crowded strategies there tends to be a sharp unwind against these funds. People know this dynamic exist, and so when the unwind slows down they jump right back in there as the forced selling stops and re-levering occurs again.
cl42 6 hours ago [-]
You'll have to clarify -- do you mean the fund, or our hypothesis on reflexivity and the value of AI assets?
andiey 6 hours ago [-]
It's a good reminder that there are many ways you might interpret Citadel's intervention...from everything I've read, it seems that everyone wants to believe this is a bullish position on AI.
I don't understand how the investors didn't realize this was going to blow up. Returns like that are not asymmetrical and can only be produced with leverage, at least when you're trading paper.
When something is inevitable and there is a large enough position, this makes adversarial attacks likely. Every small drop causes an amplified amount of pain to the investor which causes them to liquidate positions furthering the decline. SA doesn't have the history or relationships yet to endure margin calls.
I don't see the edge these companies have when they're just going long a very particular position, namely anything related to AI. Long term value in finance is made in a couple of ways. For instance, relationships & being able to source deals (lots of PE firms), short term trading infrastructure and knowledge (Renaissance), capital and clout to make favorable deals (Buffet), etc. Even then the skills are fleeting as employees leave taking knowledge and companies raise money to compete.
Buying Nvidia on leverage is not a long term strategy. Especially when all your investments are common stock and obvious.
Definitely not true, looking at their last 13f (filed in may 2026) their top3 holdings were BE, SNDK and CRWV which had 1y returns of 1,500%, 2,000% and 500% at the time of the filing. They accounted together for 15% of the fund (plus an unknown amount of exposure through options). These tickers show up in the 2 and 3 previous filings so they had exposure to some of that run up, and looking at the filings further back they had some very concentrated exposure to INTC in a half year period where the stock went up about 200%
Obviously they're not penny stocks, but they're behaving like penny stocks. And those tickers had less than a $10 billion market cap before 2026. Which is very small for a $45 billion fund.
The point is what quickly goes up can quickly go down. Leverage produces that effect. As does investing in tiny volatile small cap companies.
(Did the 13f not have any mention of option trading?)
>Returns like that are not asymmetrical and can only be produced with leverage
This is simply untrue. Just because the path to doing so is much more clear in hindsight doesn't mean it wasn't possible.
Sandisk is still up 110.82% in the last 6 months, and that's after a drawdown that's now approaching 50% from peak. Over the last year, they're up 2730%, and again, this is after the drawdown. Zero leverage.
It's also worth noting that this wasn't a total implosion, as Situational Awareness is reportedly still up over 80% YTD even after the unwind, and kept their Anthropic stake.
All the stuff that it was forced to sell to Citadel is also up ~10%-30% since the sale
and Citidel took it all at a multiple billion dollar discount to the prior close
The interesting part what this article states: SA was essentialy a thematic ETF without any hedging to buffer downside, and got margin called.
SA weren't geniuses, they weren't sophisticated. They just did the same thing everyone else did, all in on semi-conductor, AI and memory positions. They got great returns because 1) everyone got great returns and 2) they were leveraged through their ears. In fact, not only they weren't geniuses, they were pretty bad at risk management, so bad that the first mild drawdown triggered margin calls on their over-leveraged bets and they couldn't cover them.
TLDR: SA didn't have alpha, they just looked good through over-leveraged beta and got caught
He unfortunately got caught with his pants down.