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> Buying Nvidia on leverage is not a long term strategy.

The whole country of South Korea is long SK Hynix and Samsung, with insane level of leverage. That won’t be a happy ending. People talk about past bubbles as if it was a good thing long term, but that will be millions of people losing their savings, homes, decades of austerity for countries to recover

>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%

Looking at their 13f filing (filed in may 2026), they had $8 billion of leveraged put options.

Interesting - I guess at least some attempt at hedging given that they held puts in some of the same stocks they were long on.

https://whalewisdom.com/filer/situational-awareness-lp

Or perhaps this was more of an attempt to lock in some profits while still riding it higher? It seems most of his puts were in the chip stocks while his portfolio was more focused on "next phase" datacenter/infra stocks.

They had very large put positions on stock that they had very small long stock positions in, I think they were net short in almost everything they held puts on (except the smh etf put which I guess is an attempt to cancel out sector beta)

Sure, but 15% of your portfolio going up by 1000% isn't going to give you an overall 400%+ YTD return, which is where SALP was before this drop, and obviously it is no secret that they were highly leveraged.

Aschenbrenner obviously understood diversification, but was overconfident and greedy and used leverage to boost returns. He was lucky that Citadel saw fit to step in and buy their portfolio rather than having to dump it into the market which would likely have been far worse.

I was answering his point that 400% returns are impossible without leverage, and my argument was that they were in the right stocks at the right time to achieve those kinds of returns without leverage. Since a lot of their portfolio is/was options without strikes or durations listed and the exact dates of their buys/sells is unknown it's not possible (AFAIK) to reconstruct their P&L exactly but it seems plausible to me that, given the stocks they were concentrated in and the quarters they start reporting those positions, that they could have gotten 400% returns in a year without leverage. If I were an LP reading their filings saying that (for example) they held 25% of the fund in Intel during a half year period where it went up 200%, plus some other similar holdings, resulting in overall 400% returns I wouldn't automatically conclude they were levered.

Sure if you buy one stock and it goes up 1k percent it's possible. But that's unrealistic and being that concentrated is unacceptable for a fund.

Any sophisticated investor that read that a fund they were invested in a single name would be upset. Unless it's a special vehicle or they're activist and have a position for some strategic purpose. But just to let such a large percentage of your fund on a single name stock is insane.

I'll also add that options are essentially leverage. Leverage doesn't have to be borrowing it's just describing what $1 price change does to your position. You can buy at the money calls for 3-12% of the stock price. And they move up slightly less than $1 if stock goes up, so you're essentially getting 10-20x leverage. And if they're not above the strike price at expiration they're worthless

I don't have anything to say about their concentration beyond that if you read their early 13Fs (ex https://13f.info/13f/000204572425000006-situational-awarenes...) they were in fact "that concentrated" which is why it's plausible they got 100s of % returns without leverage. Re options being leverage - everything you said is true but unfortunately the public filings dont have strikes or durations so it's not possible to say whether they bought short dated otms with 0.05 delta or leaps with close to 1 delta or something in between.

Aschenbrenner is 25 years old. How many market upsets has he seen in his adult life?

They thought it was gonna be different this time.

> Returns like that are not asymmetrical and can only be produced with leverage

That's not generally true. There are sometimes highly asymmetrical strategies driven by market inefficiences that are not widely known. They're not easy to find though.

Luck disguised by genius aura, cult on the potential "young geniuses", similar to Elizabeth Holmes: https://news.ycombinator.com/item?id=49228779

https://medium.com/@trendguardian/rigged-networks-1d5ad5c6f8...

hindsight is easy. imagine apple and amazon stock holders thinking the same and selling when stock went up 100% after ipo

The problem wasn't just a decline in the stocks - obviously you expect a rocky ride in stocks that are up manyfold in a short period of the time, and Aschenbrenner certainly seems to have had the conviction not to sell early.

The problem was leverage - the decline in these stocks seems to have resulted in margin calls that he could not meet, resulting in forced selling. There was a very brief story that he was looking to raise additional funds, but within 24 hours he had sold much of it to Citadel instead, and for time being now holds an entirely unleveraged stock-only portfolio.

https://www.businessinsider.com/leopold-aschenbrenners-lette...

> > imagine apple and amazon stock holders thinking the same and selling when stock went up 100% after ipo

In the case of Amazon they'd have had the opportunity to buy at 97% discount compared to ATH

>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.

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.

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.

True, but he is still, even after this, up 80% YTD, so not a total implosion.

No doubt he has learnt a valuable lesson.

Many famous investors, such as George Soros, have had huge losses at some point in their career, but have taken in in their stride and still done well. If you are taking big swings then sometimes you will have big misses.

Uhhh.. you think this isn't driven by options trading? Which is, by definition, leverage.

That's not at all what I said. What I said had nothing to do with the mechanics driving broader market behavior.

What I said was 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. That's a demonstrably false assertion.

If you bought Sandisk, $SNDK, not options but the actual underlying equity, with no margin, just fully purchased the position with cash, you're up 110% if you bought six months ago (down from over 200%, but 110% in 6 months is still enormous), and you're up over 2700% if you bought a year ago.