The Borrowed Rocket

01the numbers

Summer 2026 · a true story

$225million

−$35 billion in one month

No villains. No fog. Just borrowing.

The Borrowed Rocket

How a $45 billion AI fund shrank to $10 billion in one month,
explained in daylight.

June 2024 · 165 pages

Situational Awareness

what AI will need, by 2027

chips

buildings

electricity

$225million from Silicon Valley backers
to buy the companies that make those things

The shovels of the AI gold rush.

Three decisions, stacked

Buy the shovels.

memory chipsdata centerspower

Bet against old software.

Looks like insurance. It isn't.

shovels

software bet

AI boomsAI wobbles

Borrow four dollars for every one.

Same bets, five times the size. Same drop, five times the pain.

investors · borrowed from banks

Fund size · late 2024 to July 2026

$0.2billion

+439% in the first half of 2026

investors

borrowed

most of the pile
was borrowed investors’ share stocks −30% the loss comes out of the investors’ share first, and it is bigger than the whole share

Samsung · Q2 2026 earnings

One of the best quarters in the history of the chip industry.

↑ 19×operating profit, year on year

Chip stocks · same day

They fell anyway.

−5%chip index on the day

“Is AI growing?”

“Was too much built, too fast?”

His biggest holdings · July His bets against software

SanDisk

−54%

Bloom Energy

−41%

CoreWeave

−36%

SK Hynix

−33%

Nebius

−27%

Adobe

↑

Salesforce

↑

Intuit

↑

He had borrowed these shares and sold them, hoping to buy them back cheaper. When they rise, that bet loses too.

Every position losing at once.

drops are peak-to-trough in July, from public reporting · schematic, not to scale

Why a drop becomes a loop

The stocks fall

The banks ask for casha margin call

He sells to raise it

The selling pushes
his stocks lower

Lending agreement · the plain version If the value of the shares bought with our money falls below this line, we may ask for cash the same day. If you cannot pay, we may sell the shares ourselves.

Nobody is scheming. It is what the contract says.

Night of July 29 · morning of July 30

11:00 pm

market opens 9:30 am

the fund

public portfolio
≈ $16 billion

−10% discount

Citadel

has cash ready
for exactly this

A seller with no time has no bargaining power. The discount is the price of speed.

Same afternoon · the stocks he had just sold

+27%

Nebius

+26%

IREN

+26%

Bloom Energy

+22%

CoreWeave

±0%

S&P 500

Nothing about the companies had changed.
The desperate seller was simply gone.

the fund gave up

the discount

Citadel picked up

the discount

+ the bounce

The money did not vanish. It moved.

Where it stands · August 2026

≈ $10Bleft in the fund at the end of July, down from $45B

+80%still up for 2026, because the first half was so strong

kepthis ≈ $5B stake in Anthropic, which he did not have to sell

“I let you down.”his letter to investors. Backers soon lined up again.

marriedthat weekend in Carmel, California, as planned

$400Minvested in a chip startup days later. No laws were broken.

Being right about the trend is not enough
if you cannot afford to wait for it.

Sources: CNBC, Bloomberg, Fortune, The Wall Street Journal, SpotGamma, Aswath Damodaran, Joe Nocera · Figures rounded · Charts schematic
Published on Almond

A four-minute story · with sound

The Borrowed Rocket. A $45 billion fund, explained in daylight.

In July 2026 an AI hedge fund lost $35 billion in a month. Most tellings sound like a noir film. This one is just the mechanism: a good idea, a hedge that wasn't one, and four borrowed dollars for every real one.

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The Borrowed Rocket. A $45 billion fund, explained in daylight.

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