The Zhitong Finance App learned that the outline of losses in the world's largest transactions is gradually becoming clear. According to the “Top 25 Trading Losses in History” list compiled by the market, a loss of 35 billion US dollars related to leveraged AI stock betting in July of this year has already risen to the top of this list. The ranking shows that only 7 of these cases involved hedge funds, and banks and companies formed the main part of the vast majority of major liquidations.
The ranking clearly reveals how leveraged, concentrated positions, and high-confidence transactions magnify relatively moderate market fluctuations into huge losses of billions of dollars.
“Situational Awareness,” which topped the list, lost about 35 billion US dollars, followed by Morgan Stanley (Morgan Stanley)'s loss of about 14 billion US dollars, and JPMorgan Chase (JPMorgan Chase)'s loss of about 13 billion US dollars.
Situational Awareness, which once became Wall Street's “AI Star Fund” this year, was founded by former OpenAI researcher Leopold Aschenbrenner. In the first half of this year, betting on AI-related stocks received amazing returns, and the scale of assets expanded rapidly. However, after entering July, AI-related stocks were drastically sold off, highly leveraged positions deteriorated rapidly, and the fund faced additional margin requirements.
Eventually, Situational Awareness was forced to liquidate public stocks on a large scale and sell most of its stock portfolio to Citadel, owned by billionaire Ken Griffin.
According to statistics, other major loss cases include Archegos Capital Management of about US$12.5 billion, Société Générale (Société Générale) of about US$11.3 billion, Amaranth Advisors about US$10.7 billion, and Long-term Capital Management (Long-Term Capital Management) of about US$9.5 billion.
The list also points out that the interpretation of this ranking requires a cautious approach, especially for investment funds. Even if a large asset management company experiences only a relatively small percentage of net worth retracement, it may have recorded billions of dollars in book losses due to its huge management scale.
Take Millennium Management as an example. Its assets under management are about $89 billion, which means that a decline of just over 2% could turn into a loss of about $2 billion. The list also notes that Tiger Global (Tiger Global)'s loss of about $40 billion in 2022 was not included in the list, which is a significant omission — if included, it is large enough to top the list.
Additionally, Jane Street is expected to be at the top of the list. According to reports, the company was impacted by about $15 billion due to AI-related transaction exposure, but controversy continues over whether this market maker should be partially classified as a hedge fund.
According to various media reports, Jane Street suffered a loss of about 15 billion US dollars in July this year. If the news is true, it means that the department recorded its first monthly loss in about ten years. This loss is mainly related to the collapse of the AI hedge fund Situational Awareness in which it invested, and the sharp shock in technology stocks during the same period.
Jane Street said in the memo: “We largely lost money on the same set of deals, and these deals had strong excess performance in the second quarter.” The company specifically pointed out that AI exposure stocks fell sharply in July, and some of the most exposed memory chip and semiconductor stocks fell by about 50%.