Citadel's Wellington fund surged 5.9% in July 2026, a gain driven almost entirely by a single deal: buying a discounted AI stock portfolio from the collapsing Situational Awareness fund. Before the purchase, Wellington was up just 0.45% for the month. The July jump alone delivered more than half of the fund's entire 10.2% return for 2025. Year-to-date, Wellington now sits at 12%.
How the deal worked
Situational Awareness, a high-flying AI-focused fund run by 25-year-old Leopold Aschenbrenner, peaked near $45 billion in early July. Then its bets unraveled. The fund had used leverage up to four times its own capital, betting heavily on AI infrastructure and against software. Its main holdings each fell more than 35% during July. Goldman Sachs, JPMorgan Chase, and Bank of America demanded more collateral. Situational Awareness couldn't meet the margin calls. It sold its entire public stock book. Citadel bought that leveraged equity portfolio at roughly a 10% discount. Citadel already owned those stocks before the purchase, so the deal added to an existing position. After the sale, the same stocks rebounded.
A familiar playbook
This isn't the first time Citadel has stepped in when a rival stumbles. In July 2007, it bought Sowood Capital's positions after that fund lost half its $3 billion. In 2006, it picked up Amaranth Advisors' energy book. The pattern is consistent: buy distressed assets at a discount, book the gain, and hold.
Other Citadel funds also strong
Wellington wasn't the only Citadel fund having a good July. Citadel Equities gained 14.2% for the month, and Tactical Trading added 11.1%. Both are up 27% year-to-date. For context, Citadel Equities returned 14.5% in all of 2025, and Tactical Trading returned 18.6%.
Situational Awareness's rise and fall
Aschenbrenner's fund had been a sensation. Through June 2026, it had returned 439%, and more than 1,000% since launching in July 2024. But the leverage that amplified those gains also magnified the losses. When the AI stocks turned, the margin calls came fast. The fund now survives on its private holdings, including a $5 billion stake in Anthropic. Its public stock book is gone.
Citadel has booked the gain from the discount purchase but hasn't sold the stocks. August 2026 earnings from those AI companies will show the true value of the discount.
