Citadel Unwinds 80% of Situational Awareness Holdings

Citadel has sold more than 80% of the equity positions it acquired from Situational Awareness, executing nearly 100 block trades with a combined value above $4 billion in recent weeks to reduce the aggregate risk it inherited after last month’s technology sell-off.

The transactions included some of the largest block trades in the market this year, the firm said. The trades were used to pare down concentrated technology holdings that came with the acquired portfolio.

Citadel took on a majority of Situational Awareness’s stock positions when that hedge fund came under severe pressure amid a sharp reversal in technology shares. The firm used its trading infrastructure and balance sheet to absorb the holdings and then sold large blocks to limit how long its balance sheet was exposed to concentrated positions.

In a letter to investors, Ken Griffin wrote, “We have prided ourselves on being front-footed and proactive during periods of market dislocation.” The letter outlined the scale of the unwind and the steps taken to manage the portfolio.

Citadel’s flagship fund posted a 6% gain in July, outperforming many peers that were flat or posted losses for the month. That performance covered the period during which the firm absorbed and reduced the Situational Awareness positions.

The firm did not provide a full breakdown of the individual securities sold or the timing of each block trade. The activity was described as part of integrating the acquired positions and lowering market exposure.