AI stock sell-off batters hedge fund returns

Alex Sacerdote’s Boston-based Whale Rock, which manages $19 billion, saw its year-to-date performance plummet from a 72.5% return through June to 35.1% following the July rout. The firm’s long-only fund fared similarly, shedding 18.8% last month. These losses followed a strategic build-up in positions like SanDisk and Bloom Energy earlier this year. A spokesperson for the firm declined to comment on the results.

Broader market jitters, sparked by instability in Asian exchanges and growing skepticism regarding the profitability of massive AI infrastructure investments, hit several high-profile managers. Philippe Laffont’s Coatue Management posted an 8.3% loss, while Marshall Wace’s Eureka fund dropped 6.9%. The sector-wide pressure intensified to the point that Leopold Aschenbrenner’s Situational Awareness fund faced a 67% drawdown, forcing a fire sale of his equity portfolio to Citadel to satisfy margin calls from lenders. While these assets saw a partial recovery following the acquisition, the month remains a stark reminder of the volatility inherent in concentrated tech bets.