Citadel takes Leopold to the woodshed
Today was one for the history books.
For this writer, it was nearly as nerve-wracking as FTX. But felt more like when 3 Arrows Capital or Luna popped. Either way…wow.
(If you missed it, wunderkind Leopold Aschenbrenner’s hedge fund Situational Awareness was margin called after reportedly hitting the leverage too hard. It became a forced seller of its public equity portfolio to Ken Griffith’s Citadel for a measly $10 billion. CNBC said that the fund was worth $45 billion at its peak in June, but reporting from the Wall Street Journal used the more conservative $20 billion figure from recent 13F filings).
Either way, its hard to overstate what this means for the market. And its implications are hard to pin down. Some questions, I’ll leave the reader:
Will Citadel sit on these positions, now that they purchased them at a discount? They included some of our favorite names like IREN, CLSK, RIOT, APLD, CORZ and more.
Did Citadel put out a head fake on Federal Reserve interest rate policy, just to push the market over the edge and liquidate SA?
What do we make of big bet investing in AI names, given the volatility? Are we past the market’s peak euphoria, now that a blood sacrifice has occurred?
Did we just bottom, or is there more to unwind? A few other distressed hedge fund names are floating around as well.
Aschenbrenner is reportedly trying to raise cash to revitalize the fund. Let’s watch (fool me once, shame on you, but fool me twice…).
Let’s pour one out for Leo, who now has to start from scratch.
BLOCKSPACE
Situational Awareness Gets Liquidated, META/MSFT Earnings, TeraWulf Cleared for Morgantown Acquisition
In the News
Amazon Q2 sales rise 20% as AWS revenue jumps 37%
Amazon (NASDAQ: AMZN) reported Thursday that second-quarter sales rose 20% to $200.6 billion, while operating income increased 43% to $27.5 billion. Its operating margin widened to 13.7% from 11.4% a year earlier.
Amazon Web Services revenue increased 37% to $42.2 billion, its fastest growth in 18 quarters. AWS operating income climbed 64% to $16.6 billion, accounting for about 61% of Amazon’s consolidated operating income.
Morgan Stanley Sees CIFR, GLXY Upside From ERCOT’s 65 GW Batch Zero
Morgan Stanley estimates ERCOT could classify about 65 GW of large-load requests as Base Load, potentially clearing advanced data center projects to move toward grid connection. That estimate is 30 GW above the bank’s previous expectation and could benefit site operators with mature interconnection positions.
Morgan Stanley identified Cipher Digital (NASDAQ: CIFR) as its preferred exposure to the process, followed by Galaxy Digital (NASDAQ: GLXY), while naming Vistra (NYSE: VST) as the principal beneficiary of potentially higher Texas power prices.
KBW upgrades Core Scientific after AMD leases raise contracted value, eyes 35% rise
Keefe, Bruyette & Woods upgraded Core Scientific (NASDAQ: CORZ) to Outperform from Market Perform on Thursday, arguing its 529 MW AMD lease package raises the stock’s valuation floor despite execution and financing risks.
KBW analyst Stephen Glagola increased his price target to $28 from $25, implying a 35% total return from the report’s $20.75 reference price. Core Scientific shares had fallen 20% since KBW downgraded the operator on July 27, one day before the lease announcement.
FERC approves TeraWulf purchase of former Maryland power plant for AI campus
The Federal Energy Regulatory Commission authorized TeraWulf (NASDAQ: WULF) subsidiary Chesapeake Data to purchase Maryland’s Morgantown Generating Station on Wednesday, advancing its plan for an AI infrastructure campus.
The transaction gives TeraWulf control of Morgantown Power, which owns four operating oil-fired units with approximately 216 MW of combined generation capacity. The former coal plant is located in Charles County within PJM’s constrained PEPCO transmission zone.
The Daily Meme
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