The Collapse of Situational Awareness, Ferrari Luce Stays on Track for 2026 | Diet TBPN

0:00John Coogan:Absolute chaos on the timeline. Last night, this morning, around Leopold Aschenbrenner's hedge fund situational awareness, they have been forced to unwind their public stock portfolio after steep losses on AI infrastructure bets. CNBC reported this on Thursday, today. uh prime brokers reportedly rushed to raise cash to meet margin requirements while ken griffin's citadel my former employer uh reached a deal to purchase the fund's publicly traded assets did ken ever do anything to you no like this no what no you were just an intern i was an intern i would i i would have loved to be getting him coffee did he ever try to maybe intentionally send the markets into turmoil just to test you?

0:48John Coogan:No, but I mean, honestly, the story of Citadel is crazy. I mean, after the housing crisis, the fund was down 50 % and it was a very, very dark time. There were... Good thing for Ken, though, at that time, Ken Griffin, what he would become didn't exist. And otherwise, he probably would have eaten the young Ken Griffin alive. Yeah, maybe, maybe. Much like it seems that Ken has done to Leopold. Yeah, maybe, maybe. The other The other frustrating thing is that they went down 50%. I think the next year they went up 50%. And this is the classic explaining fund math to people. Oh, you're back up 50%.

1:24John Coogan:Great. You're back to where you were. Nope. You need to go back up 100 % if you're down 50%, of course. Anyway, the fund had built concentrated positions in AI infrastructure companies, including Nebius, SanDisk, Micron, and CoreWeave, while also betting against software companies such as Adobe. those trades have as unraveled as AI infrastructure stocks plunged in recent weeks before rebounding sharply today. Now, how much of the plunge is around shaken faith in AI's ability to deliver value, open source, or just oil, inflation, the Fed's actions? We'll get into all of this because there's a lot of moving pieces that led us to where we are today.

2:09John Coogan:So also relevant here, It's from the TBPN newsletter. You can go sign up at tbpn.com. And what a bunch of people are pointing out at X is the fact that on Tuesday, it was reported that Citadel expected a surprise rate hike from the Fed meeting that took place yesterday, which did coincide with more sell-off in the market. So the market has been selling off based on what might happen at the Fed. We reported on the Fed news. There were three Fed governors that said we should raise rates, but the rate held steady, but mortgage rates are over a one-year high at 6.66 % today. Very odd number. But yesterday, the Fed left the rate unchanged, and today many of the stocks in Leopold's portfolio are up double digits and we'll sort of go through them.

2:53John Coogan:They're up today based on the news that Ken Griffin is buying the portfolio, but they are still down over the last month, for example, in many cases. Ashton Brenner, a former OpenAI researcher, rose to prominence after publishing his 2024 essay series, Situational Awareness, the billion-dollar PDF, as Wilmanitis put it, I believe, which argued that rapid AI progress would require an enormous build-out of chips, memory, power, and compute infrastructure. That thesis became the foundation of his investment strategy. After launching the fund, he's also engaged to Anthropics CEO Dario Amadei's chief of staff.

3:27John Coogan:The news is coming in hot and fast on the story. Here's a timeline of the most important headlines so far. So Bloomberg, 9.25 p.m. yesterday. I remember I think you texted me this as I was going to sleep. And we were like, whoa, this is a big deal. I wonder how crazy this will get over the next few days. It got very crazy very quickly. So Bloomberg reported, Leopold Aschenbrenner's situational awareness seeks to raise capital after AI route. There was an article in the Financial Times as well last night just saying that, hey, there's some rumors that are leaking out from LPs that they got a letter saying like, hey, the market's down.

4:02John Coogan:Now's a good buying opportunity. The thesis is as strong as ever. If there was ever a time to put more money into this fund, now's the time. That can be good. You want to be buying when things buy low, sell high, right? But at the same time, if it's to cover margin calls, if it's because the fund's getting beat up, it's a little bit rougher of a pitch. Then at 6.05 a.m., CNBC announces that AI investor Leopold Aschenbrenner has been forced to unwind all public stock positions after steep losses, according to CNBC sources. And then the Wall Street Journal reports at 8.39 a.m. that Citadel has stepped in to buy situational awareness's stock portfolio after big losses in AI.

4:40And so after living through FTX and SVB and now this on the timeline. No, it just grizzled. No, the key takeaway is like when leverage is involved, things just move so, so, so fast. Right. You remember with FTX. Yeah. There's kind of some rumblings. Yep. A couple of posts from SPF saying like, we're fine. It's all good. And then it was over. And it is. And then the same thing with SVB. Yep. Like couple rumblings, maybe like a couple of weeks, a week beforehand, a few posts here and there. And then it just moves so, so fast. Right. Yeah. Quite a bit different than traditional venture world where when a company is dying, it dies over two, three years.

5:25Yeah. Sometimes more.

5:26John Coogan:Yeah. Yeah, yeah, yeah. I'm thinking of like, I mean, we've had some of these companies on from the private markets where they've gone through big booms and busts like Bird and then they've built back and they've turned around. But there's so much more. Bird turned around. No. Talking about Lime. Lime turned around. But it took like an extra five years for Bird to actually wind down. And it's because there's no leverage in the system. There's just a bunch of dollars that sit there as equity and those get burned down. But every month, if the business is deteriorating, you're cutting costs, shrinking the business, tightening things up, making that 12 to 18 months last 24 months.

6:01John Coogan:And then you wind up 24 months in, and you're like, oh, we're not going to be able to raise again. Let's stretch this again and right-size the business again. And all of a sudden, so it takes years and years for these things to unwind. Although they are correlated in the venture world, they can be decorrelated in the unwinding process. And then there can be other things that are outweighing the portfolio. So every VC that had Bird on their books probably also had some SpaceX on their books or something. And so there's this balancing effect. And it takes years for these things to balance out. And they can be unwound at different periods in the market as opposed to everything needing to happen all at once.

6:35John Coogan:So I like this post from Richard Crabe, one of my favorite investors. He runs the quant hedge fund Numeri. And he says, I think it's cool that funds like situational awareness can exist in America and that there's a market for them. But the outcome was never about being right or wrong on AI. At 150 % vol, variance drag alone is 113 % a year. And risk of ruin is roughly a coin flip over the fund's life. A child can do the math on a napkin. Claude did it for him. AI says ruin wasn't unlikely. It was roughly even money. So there's a 50-50 % chance, 50 % chance that the fund sees so many losses that they have to do this liquidation process.

7:20John Coogan:And that's basically what happened. And it must be so frustrating because it really does not feel like, oh, Leopold was wrong about AI and the AI build out. It's like, well, there's oil and a war and interest rates and all these other things going on that are creating some jitters. And then also once the AI trade and the infrastructure trade got so big, you wind up with like this retail froth on top that makes things even crazier. and then all of a sudden... All that he was benefiting from. Benefiting from. But also, it's much harder to do sort of a first principles analysis on what the psychology of a frothy market will do as opposed to just retreating to, okay, well, there's this, the model progress is progressing like this and token pricing is, you know, counting the ooms stops sort of working when it's like, well, will this particular stock become a meme stock, right?

8:15Pull up this picture. because there was a lot of this going on this morning.

8:19John Coogan:The memes are flying. This is truly a timeline takeover today. This was the first meme that popped into my head of people saying, oh, I don't know why the guy's head's cut off. You guys okay? This was you. No, this was just a lot of people on the timeline being like, I knew he would blow up. Yeah, yeah, yeah, yeah. The armchair experts are out in full force today. In many ways, we are among them. So I like to think about it like at least some of the more high-profile LPs in situational awareness. A lot of them are like great founders. Maybe they have big, big positions in the labs and all these different things.

8:59And it's quite possible that situational awareness, at least when they invested, was like 5 % of their portfolio. And they're just thinking like go giga long. Maybe less. Yeah, yeah. For some of these people, it might be like less than 1%. right? Whatever it is. And so it's actually somewhat pragmatic for them to just be like, yeah, go crazy. Go crazy. Do whatever you want. Yeah, that's the product. That's the product. That's what I want to buy. The rest of my portfolio is fine. You're going to have a lot of AI exposure, whether you like it or not. But yeah, it is actually crazy that it didn't even take a three-month drawdown, right?

9:38It was, what was it? June 1st, they were at 45 billion of AUM, something like that was was the nap i think end of june and end of june so beginning of july and then how quickly how quickly things can change and uh you know poor poor leopold already went through this with ftx i believe he uh he and the rest of the the future ftx future fund team i believe resigned like right when oh what's interesting is people are people are uh framing

10:08John Coogan:this as like they got pennies on the dollar or ken griffin bought the portfolio for pennies on the dollar. And when I think pennies on the dollar, I think like five pennies per dollar. So like 5 % recovery, but it might be closer to like 50 % of book value. It might be 80 % of book value. I don't know. There's news in Ferrari world that the Ferrari EV, the Luce designed by Johnny Ive has already hit the 2026 sales target. The haters are in shambles. Everyone doubted that this would sell. And the Italian carmaker reports strong demand from China for electric model derided for its unconventional design.

10:48John Coogan:There's a whole bunch of interesting tidbits in here in the Financial Times article. Ferrari has hit this year's sales target for its first electric vehicle on the back of strong demand from China, despite a polarizing design that drew backlash from investors and enthusiasts. Remember, even the former CEO, former chief design officer, former executive came out and said, this is not a Ferrari. There was a lot of back and forth in the timeline. I could have designed a better one with Chachapiti. A lot of people threw out different designs, but this one is selling, at least according to the Financial Times.

11:20John Coogan:The Italian group has not disclosed its target for the Luce, but two people with knowledge of the matter said it had aimed to sell this year just under 500 units of the EV. Not a lot, but their goal for by 2030 over the next four years is to get to 2 ,500 units. So 500 a year for four or five years. That's where they want to get here. And they say they're on track. And so this is priced at 550 ,000 euros, 650 ,000 USD, something like that. One of the two people said the target had been reached earlier in July, just two months after its controversial launch, when critics on social media derided its unconventional styling.

11:59John Coogan:There's also an interesting line in here that Ferrari says they gave strict instructions to dealers not to force its traditional petrol-loving collectors to switch to electric cars. He said, if you want a Luce, we'll give you a Luce, but we're not going to make you buy a Luce in order to get in line for an SP3, SP4, some special F80 thing that's more limited. Just if you want it, it's here. It's a choice. And a lot of people made that choice, according to these insiders. What do you think? Give me the pushback and then we'll debate it. I was pausing because I wanted to start with something nice.

12:33Hit me. I think, so the videos that I've seen of it on the road, it does look even more strange than in the images.

12:42John Coogan:What is this photo? That's not, what is that? The team just accidentally put in some random car. Okay, so the car is strange. I love the interior, but the car overall is strange. It's still unclear to me who it's really for, but they are finding buyers. The idea that buying the Luce, like Ferrari is saying we're not forcing any dealer to push this car or whatever. But the idea that it's not going to have some, whether or not you bought a Luce is going to have some weight on your future allocations to me is just insane. There's just no way that that's true because every single dealer is going to look at their client list.

13:23They're going to look, what cars have they purchased? Like we know multiple Ferrari collectors that are buying two separate cars that they don't even want of the same style in order to gain status within the dealership and show that they're a proper collector and they're properly sort of cherishing the brand. And so I'm not at all surprised that they've sold 500-ish units. That's about as many as I would have expected for 2026. I actually, I guess if you asked me, I maybe would have thought they would have done more. Like to me, this was a car that was so different than the rest of their cars.

13:59It serves a wildly different use case. I would have expected their sales targets to be quite a bit higher, simply because when it comes to the really special cars, they make about 500 of them. And so I would have expected at least 500 sales guaranteed. And then you would hope there was a bunch of incremental buyers, people that are like, yeah i actually don't want a ferrari sports car but i do want a daily and why not go for a ferrari daily right so you would have thought that there would have been like 500 for the first year was like my very base case and i would have expected a bunch more on top of that so i think they're positioning this as a win i think people are going to love the car if you ignore the price but i don't think it's the win that uh

14:43John Coogan:I love the poke and the luchang. It's so good. Okay, three points in response to yours. Two, first point. The design's absolutely growing on me. Like, watching these videos here, it just looks way better than when we first saw the first pictures. And I don't know if it's just distance and I'm becoming more familiarized with it, but it looks a lot better. Even the exterior. I've always agreed on the interior. I think everyone agrees on that. But the exterior is looking better to me somehow. I don't know if this is just like I'm getting used to it. Two, yes, there are the 4D chess Ferrari collectors who are saying, I know I'm not getting pressured, but I'm buying one anyway because I think it'll help me jump the line, and I'm doing that independently of any pressure that's coming.

15:28John Coogan:But there's also just collectors that are like, this is going to be a piece of Ferrari history regardless of if they – what if they never make another EV again? What if the Feluche is canceled next year and Ferrari literally for 30 years never makes an EV. This thing is important historically. It's an interesting thing to have in your collection. And then there's also just people that are like, I'm a true collector. I want every possible Ferrari experience. Give me the SUV because I want to see what that's like. Give me the mid-engine. Give me the front engine. Give me the electric. Give me everything.

16:01John Coogan:Give me a vintage. Give me a new one. Give me a road car. Give me a track car. Give me, I want a Ferrari F1 car. I want all of the experiences because I just want to experience everything Ferrari because I'm that deep with the brand. And then lastly, the question of, you know, what was their goal? I don't see this as their Urus. I don't see this as they were trying to make a mass market daily. I think that they were trying to make a very iconic, very iconoclastic, very contrarian car that was bold and weird and different. and it happened to be dailyable. And the fact that it is dailyable is what is weird about it.

16:43John Coogan:Like they're not known, the brand is not known for being able to be dailied and yet they made one and that makes it weirder. And I don't think that they were going after this is something that will be like a Lamborghini Urus, which they can sell in mass volume and completely change the profile of their sales curve. My view is that they, I think those are all great points. My view is that I don't think they should have done a car like this because I do think it hurts the brand. Unless it was going to drive so many sales that it could make the rest of the cars that they make better. Right? Like what the Cayenne did for Porsche or what the Urus does for Lamborghini.

17:20John Coogan:I have one last post I want to go through. Jordy, have you seen Spider-Man No Way Home? Absolutely no. Absolutely not. Should I? I think I have. I'm pretty into movies now. But we were. I saw the Odyssey and I appreciate film. You're a film buff now. I'm somewhat of a, yeah. No, there was a question on the timeline from Rob Felt. He was re-watching Spider-Man No Way Home to prep for Brand New Day, the new Spider-Man movie, in Spider-Man No Way Home, the movie, the prequel to Brand New Day. I think Homecoming is in this series, right? There's a whole series of the latest round of Spider-Man with Tom Holland, right?

18:03John Coogan:Is that it? Daily Bugle web show scene pops up. And all I can think about now is a question. Is the TBP anesthetic inspired by J. Jonah Jameson's web show? And if you look at it, it does sort of look like our show. And so it's a good question. Did we see this film? Did Jordy, who is the brand architect of the TBP anesthetic, watch Spider-Man No Way Home and say, Ah, I like that color. I like that design. Let's bring that into our studio. And the answer, no. No. No. Lots of other influences, but this was actually not one of them. I believe I have seen this. Yeah, we like the color green. I remember Jordy one morning, we were working out, and he's like, we should do green.

18:50John Coogan:And I'm like, okay, yeah, that sounds good. I like green. And he's like, no one's done green. And I'm like, that's not true. Like, Robin Hood is green. There's plenty. He's like, no one in tech has ever used green before. TBPN Green. I'm like, it is a white space in the sense that, like, yeah, I couldn't think of another podcast with the green, dark green background. And we did find our own space. We looked at Pinterest a lot for different references, some photos, some catalogs. I didn't look at Pinterest. What images were you pulling from? Because I know you had some references. I mean, obviously, F1.

19:27John Coogan:But just your brain? Just your brain? You don't let much go in there. Certainly not movies. sign up for our newsletter at tbpn.com and we will see you tomorrow goodbye