Hedge Funds Take Big Hit in July After Bruising AI Selloff

Several prominent hedge funds reported steep losses in July as artificial intelligence shares tumbled, Bloomberg reported. Situational Awareness plunged 67% last month and offloaded most of its public equities portfolio to Citadel to meet margin calls, according to the report. PivotalPath founder Jon Caplis said hedge funds had historically high exposure to momentum trades and crowded long bets before the reversal. The firm's index tracking technology, media and telecom hedge funds fell 10% in July, the most of all its benchmarks. Whale Rock Capital Management's flagship tech-focused fund fell 21.7% in July, erasing about half of its gains for the year, a person familiar with the matter said. Altimeter Capital Management's AI-focused fund tumbled 11% last month. Tiger Global Management's long/short equity fund lost 4.8% in July, while its crossover fund fell 2.7%. Millennium Management fell 2.1%, paring year-to-date gains to 8.2%. Balyasny Asset Management declined 1.5% and Verition Fund Management was down 1.1%. Citadel's flagship fund climbed 5.9% in July after buying Situational Awareness's portfolio at a 10% discount, pushing its year-to-date gains to 12%. The firms declined to comment on the performance.