Morning Coffee: How the arrogant 24-year-old hedge fund manager was saved by the old guys. Interns with return offers of $700k

It's not often that superhero types are depicted as a bunch of suited hedge fund guys in their late 50s, but maybe we should all be momentarily thankful this morning that 57-year-old Ken Griffin and his assorted crew of similarly aged men leapt into the fray and plucked the publicly listed investments of Leopold Aschenbrenner's Situational Awareness fund from the flames. Even if they weren't wearing capes and coloured tights. 

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In doing so, the Financial Times suggests that Griffin and his crew played an important role in steadying the markets following a global semiconductor rout that was in danger of "running out of control." Some of Aschenbrenner's largest investments - CoreWeave and SanDisk - had fallen nearly 60%, partly in the anticipation that Aschenbrenner might be forced to dump a lot more of them into a falling market. When Griffin and the guys (Pablo Salame, Gerald Beeson, Shawn Fagan, Perry Vais) swooped in, CoreWeave rebounded 21% and SanDisk rebounded 26%. “Now we’ve found a narrative, and we can move on,” declared Max Kettner, chief multi-asset strategist at HSBC. 

For the moment, the new narrative is that semiconductor stocks were falling because Aschenbrenner was selling to meet margin calls from the likes of Goldman Sachs and Morgan Stanley, and that there is still money to be made from semiconductor firms. Griffin et al are making it. Bloomberg notes that Citadel itself hadn't been having a great month before its valiant rescue of Aschenbrenner's $16bn portfolio. Citadel's Wellington Fund was reportedly up less than 50 basis points for the month through to July 24. Now that it's got Aschenbrenner's investments at a discount of more than 10%, and they've rebounded by more than 20%, and have likely been instantly sold on again, the Wellington Fund is likely to be up by a lot more.  Bloomberg notes that Griffin is an old hand at this sort of thing and has made "fat pitches" for assets owned by distressed investors like Amaranth, Enron and Sowood Capital Management in the past. He has a "preternatural ability" to sniff out trouble and to provide "crisis capital" at the critical moment. 

Where does this leave Leopold, the large-toothed 24-year-old German Wunderkind who was aged around six at the time of the 2008 financial crisis? Not looking quite as "situationally aware" as he'd claimed to be in the seminal essay that made his name, but not looking like an average 24-year-old either. The WSJ notes that Leopold still has $10bn of assets under management. He still has his private investment in Anthropic. He still owns a mansion in the "Nob Hill" neighbourhood of San Francisco. He is now promising investors "a higher level of resilience going forward.” 

Nonetheless, Leopold's superhuman sheen is less than before. After positioning himself as an unusually insightful guy and deriding "wordcels" who don't do mathematics and don't understand the coming AI revolution as explained by his favourite chart below, Leopold has revealed himself to be a guy so enamoured of his own beliefs that he leveraged his investments up a reported 3-4 times with no effective hedges. His investors have also revealed themselves to be so enamoured of Leopold that they have lost half their money.

Those investors include Patrick and John Collison, who founded Stripe and who reportedly spent several hours at Leopold's office last Wednesday as he and his team began negotiating with Citadel (and briefly with 77-year-old Izzy Englander, who was also sniffing around on behalf of Millennium). 

Griffin and Englander were reportedly in Europe for the calls, which the WSJ says went on well past midnight. Maybe the meltdown interrupted their vacations? For Leopold Aschenbrenner himself, the crisis interrupted his wedding. The WSJ says he was marrying the chief of staff to Anthropic CEO Dario Amodei, and that the guests were arriving just as the "pre-wedding colloquium to discuss ideas in panels and breakout sessions" commenced. It all sounds a bit awkward. Leopold's ideas aren't infallible after all.

Source: An insightful chart included in Aschenbrenner's "Situational Awareness" essay

Separately, Aschenbrenner's sparkle may have lessened, but there are still plenty of impressive 20-somethings in financial services. The Wall Street Journal reports that 20-year-old quant geniuses and mathematics graduates are receiving return offers from quant finance internships of $700k or maybe more. Maybe $1m. Sometimes they even receive offers of $1.5m, say recruiters. You have to be outstanding. It helps to have large language modelling skills. You could even write a 165 page essay proclaiming your prescience, like Aschenbrenner did. There's a gap in the market for a 24-year-old soothsayer. 

Meanwhile...

"Right now, there are perhaps a few hundred people, most of them in San Francisco and the AI labs, that have situational awareness. Through whatever peculiar forces of fate, I have found myself amongst them..." (Leopold Aschenbrenner's June 2024 essay) 

Situational Awareness initially tried to sell its privately held company stakes to Sequoia and Greenoaks. (Bloomberg) 

Beware earning more than £260k in the UK. Your annual tax-free pension allowance is reduced by £1 for every £2 of adjusted income above that amount. (Financial Times) 

Farzad Kassam, a senior macro portfolio manager at Millennium, is launching a new fund in Dubai. (Bloomberg) 

Point Bonita Capital, the Jefferies-owned fund that had $715m exposure to bankrupt car parts provider First Brand Group was run by 15 professionals and managed $3 billion. Now it only employs five people. (Bloomberg)  

Chinese VC firms are thriving. HSG, IDG Capital, Matrix Partners China and Future Capital are raising new funds. ZhenFund and Qiming recently closed funds. (FT) 

What if video CVs replaced actual CVs. This is a thing. (The Times) 

Candidates are using deepfakes to conduct video interviews. In one case, a recruiter interviewed one person only to have someone entirely different show up on the first day of work. (Bloomberg) 

You'll never be lonely if you join the Masons. (FT) 

Parents are taking a strong interest in their adult children and even calling in sick for them. (WSJ)

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