Citadel has sold more than 80 per cent of the positions it acquired from Situational Awareness, following the AI-focused hedge fund’s near-collapse during last month’s technology sell-off, according to a report by the FT.
Ken Griffin’s hedge fund told investors on Friday that it had substantially reduced the “aggregate risk” inherited from Situational Awareness. The firm has executed almost 100 block trades in recent weeks, with a combined value of more than $4bn.
Citadel said the transactions included some of the largest block trades seen in the market this year, highlighting the scale of the portfolio unwind.
The move comes after Citadel stepped in to acquire the majority of Situational Awareness’s stock positions as the hedge fund came under severe pressure amid a sharp reversal in technology shares.
In a letter to investors, Griffin said Citadel had sought to act decisively during the period of market disruption.“We have prided ourselves on being front-footed and proactive during periods of market dislocation,” Griffin wrote.
The portfolio disposal has taken place against a strong period of performance for Citadel. Its flagship fund gained 6 per cent in July, outperforming many peers that posted flat or negative returns during the month.
The rapid reduction in the Situational Awareness positions underscores Citadel’s approach of using its trading infrastructure and balance sheet to take on distressed or dislocated portfolios, while moving quickly to reduce market exposure once the positions have been absorbed.
