‘Nostradamus of AI’ blamed for massive $15B loss – Business News
Jane Street took a $15 billion hit in July from its publicity to AI-focused hedge fund Situational Awareness and different tech shares that have been battered by the market selloff, in accordance with two people aware of the matter and a observe seen by Reuters.
The secretive Wall Street trading giant, nevertheless, has generated trading income of more than $40 billion yr up to now, one of the sources mentioned, simply outstripping trading income on the largest banks and different market-making rivals.
In July, Situational, which is run by Leopold Aschenbrenner, nicknamed the “Nostradamus of AI” and a former OpenAI researcher, offloaded the majority of its stock portfolio in what was a fire sale to billionaire Ken Griffin’s Citadel after being harm by the AI selloff that triggered margin calls on the firm.
In July, Situational, which is run by Leopold Aschenbrenner, a former OpenAI researcher, offloaded the majority of its stock portfolio in what was a fire sale to billionaire Ken Griffin’s Citadel. Linkedin/Leopold Aschenbrenner
Situational counts Jane Street amongst its traders.
In a observe to staff on Friday, executives at Jane Street mentioned July was a “bad month” for the firm, blaming the drawdown at Situational for contributing to its poor efficiency during the month.
“We have an investment in Situational Awareness, an externally managed AI-focused hedge fund, that became large by performing well in the first half of the year. They had a large drawdown that left our stake about flat on the year, but still up over the entire period we have been invested,” in accordance with the observe to staff that was seen by Reuters.
The firm additionally took a hit from its long positions in non-AI shares in Asia, many of which had outperformed the markets earlier during the yr.
Jane Street took a $15 billion hit from its publicity to AI-focused hedge fund Situational Awareness and different tech shares that have been battered by the market selloff. REUTERS
“We largely lost on the same portfolio of trades that had strong outperformance in the second quarter. AI-exposed stocks were down a lot during July, several of the largest memory and semiconductor stocks were down around 50%,” Jane Street mentioned within the observe.
Jane Street mentioned it will be “more selective” about risk, including that the firm has “closed a significant portion of our risk in the specific areas we lost on in July, and have also reduced risk taking in other strategies.”
“AI-exposed stocks were down a lot during July, several of the largest memory and semiconductor stocks were down around 50%,” Jane Street mentioned within the observe. Wall Street merchants, above. REUTERS
Jane Street couldn’t be instantly reached for remark.
