TMTB EOD Wrap: the "Leopold Low"...Amazon (AMZN) Apple (AAPL) Reddit (RDDT) First Takes

Good afternoon. Well, that was an unexpected, interesting, and fun day. QQQs +3.3% with Semis +8%. Stocks were already up early on the back of a better July OpenAI ARR # & MSFT’s Azure accel (along with Satya threading the needle on ROI), but things got more really interesting really fast when CNBC reported that Leopold Aschenbrenner’s Situational Awareness fund was forced to unwind all public stock positions (which were sold to Citadel). There had been rumors of this floating around the buyside all week now, but the magnitude of the news still came as a shock to many. Here was our initial take in TMTB Slack:

Why? Knowledge is volatility reducing. There’s been a lot of head-scratching on the magnitude of the moves down since Friday, which sapped investor confidence and forced further de-grossing as the drawdowns got intense. That’s not unique to the AI trade, but the AI trade was crowded, and it sees to carry more “behind-closed-doors information risk” than many other trades (eg, “what do the labs and others know that we don’t?”) When prices are falling and nobody knows why, every investor has to price in the possibility that the seller knows something they don’t. Everyone on X starts freaking out with weird theories. Moves feed on themselves, etc.

Now we have a reason why. It was SA’s leverage that got them into trouble and now there is an answer to what was previously unexplained, and arguably the cleanest resolution you could ask for: Citadel swooped in for entire public book in one print. Seller done. Near-term supply out of the way & the uncertainty discount comes out of the tape at the same time.

That’s all to say: we think the moves today make sense. It’s not surprising some of Leopold’s largest holdings were up the most: NBIS +27%; BE +27%; SNDK +26%; CRWV +22%. Many names up mid teens. TMT Mo +17%

Where do we go from here?