Situational Awareness Auctions and a $30bn Loss
Situational Awareness ran two auctions simultaneously, keeping one set of bidders completely in the dark about the second. This led to a significant $30 billion loss revealed three weeks ago. The Wall Street Journal has reconstructed the intense six-day period, detailing unexpected twists and turns.
The Unsuspecting Bidders
David Mann, managing a family office holding stakes in companies like Anthropic, received a phone call on July 29th while in a taxi to LaGuardia. Someone acting on behalf of Leopold Aschenbrenner’s fund inquired about purchasing Mann’s stake in Anthropic—a company valued at nearly $1 trillion. Mann inferred the urgency: Aschenbrenner was likely forced to sell due to unforeseen circumstances.
The Narrowed Buyer List
Anthropic’s unique share transfer approval rights limited potential buyers. Situational Awareness approached Sequoia, Greenoaks (an investor since the fund’s inception), Michael Dell’s DFO Management, and XN. They offered a 20% discount with a 12-hour deadline for completion.
The Unrevealed Second Auction
While negotiations were underway with these bidders, Situational Awareness secretly negotiated with Citadel and Millennium Management for something far larger. These talks, initially unnoted by the first set of bidders, culminated in Citadel acquiring leveraged positions at a 10% discount early on July 30th, before Aschenbrenner informed investors of the "better deal."
Market Speculation
Prime brokers’ reports and rival traders’ analyses played a crucial role in uncovering the fund’s distress. Declining leverage in tech and shifting positions hinted at Aschenbrenner’s struggles. Companies like Nebius, Bloom Energy, Sandisk, and Core Scientific experienced significant drops, while positions he had bet against saw gains.
The Wall Street Journal’s report reveals a complex financial narrative, showcasing the intricate dynamics of high-stakes auctions and market speculation.