Special edition: Wall Street’s wild week

{"text":[[{"start":3.22,"text":"One note to start: It has been an extraordinary week on Wall Street. We wanted to delve further into the wild ride for the AI-focused hedge fund Situational Awareness. And we also look at the fierce backlash that emerged in response to Fifa’s proposal."}],[{"start":18.12,"text":"And a correction: Yesterday’s newsletter incorrectly referenced Peter Thiel as being an investor in Situational Awareness. The venture capitalist was not an investor in the fund."}],[{"start":null,"text":""}],[{"start":28.24,"text":"Welcome to Due Diligence, your briefing on dealmaking, private equity and corporate finance. This article is an on-site version of the newsletter. Premium subscribers can sign up here to get the newsletter delivered every Tuesday to Friday. Standard subscribers can upgrade to Premium here, or explore all FT newsletters. Get in touch with us anytime: Due.Diligence@ft.com"}],[{"start":52.4,"text":"In today’s newsletter:"}],[{"start":52.9,"text":"Situational Awareness’s turbulent week"}],[{"start":55.96,"text":"How the controversial Fifa deal was hatched"}],[{"start":58.56,"text":"Situational Awareness shakes Wall Street"}],[{"start":61.34,"text":"Relatively few people on Wall Street had heard of the hedge fund Situational Awareness even one week ago. By Thursday morning, that had entirely changed."}],[{"start":69.96,"text":"The AI-focused firm, run by 24-year-old Leopold Aschenbrenner, had stealthily amassed more than $20bn in assets over less than two years. But after a hot streak of returns, the hedge fund ran into trouble in July."}],[{"start":83.34,"text":"Debt-fuelled bets on a dazzling future for AI put Aschenbrenner on the wrong side of a brutal market sell-off in recent weeks, as companies such as Bloom Energy and Sandisk fell sharply."}],[{"start":94.22,"text":"The FT covered every twist this week, breaking the news late on Wednesday night in New York that the hedge fund was looking to raise fresh capital from investors after suffering heavy losses."}],[{"start":104.64,"text":"A drumbeat of pressure from the fund’s bankers, and efforts to rapidly sell chunks of its portfolio, culminated over 24 hours from Wednesday into Thursday, when Aschenbrenner got on the phone with Citadel’s Ken Griffin, the FT reported in a deep dive on the fund’s troubles."}],[{"start":119.88,"text":"Launched in 2024 by Aschenbrenner, the firm was far better known in Silicon Valley, where many of its tech-focused investors were based and where the young trader had developed a cult following."}],[{"start":130.66,"text":"The trouble Situational Awareness was in was noticed by some of the biggest names on Wall Street, with Citadel beating out rivals Millennium Management and Jane Street for the hedge fund’s public stock holdings, which were once estimated at $16bn."}],[{"start":145.46,"text":"Citadel’s swoop on Situational Awareness has been credited by investors as playing a key role in steadying global markets following a $3tn semiconductor rout that was threatening to run out of control."}],[{"start":157.4,"text":"Meanwhile, Aschenbrenner has vowed to “fight another day” in a letter sent to investors late on Thursday."}],[{"start":163.7,"text":"He said he took “full responsibility” for the events that led to a 67 per cent plunge in assets in July, and said he would make it his “mission to ensure that we learn the necessary lessons from this experience”."}],[{"start":175.3,"text":"The fund would continue to operate and would not exit public equities, he said. He also added that Situational Awareness would no longer borrow money from banks to magnify its bets."}],[{"start":185.82,"text":"The deal that sought to change football forever"}],[{"start":188.22,"text":"Just before Spain and Argentina were to play the World Cup final, the football world assembled in New York’s Waldorf Astoria, Fifa’s base during the five-week tournament."}],[{"start":197.18,"text":"As torrential rain poured outside, rumours spread that Gianni Infantino, president of global football’s governing body, was going to announce something big."}],[{"start":206.08,"text":"But while focus soon turned to the play on the field, capping Fifa’s most lucrative event, and television shots showed Infantino sitting with US President Donald Trump, a megadeal was brewing."}],[{"start":217.34,"text":"Ten days later, the FT revealed what Infantino had been intending to share: a plan to set up a new company housing Fifa’s commercial interests and sell a stake in it to private investors."}],[{"start":227.78,"text":"It was billed as a chance to bring billions of fresh dollars into the game, to be distributed to countries across the globe to grow the sport."}],[{"start":234.98,"text":"In a deep dive, the FT breaks down how the months-long effort came together to essentially sell the World Cup as one of Wall Street’s blue-chip investment opportunities."}],[{"start":244.22,"text":"Since its revelation, the plan has shaken the football world to the core, causing Uefa, the administrator of the Champions League, and UK Prime Minister Andy Burnham to condemn the commercial concept."}],[{"start":255.06,"text":"A top Fifa adviser resigned in protest while Fifa’s chief operating officer and his colleagues said they had been “deceived” by those behind the investment scheme, and that it must “not go ahead”."}],[{"start":267.78,"text":"Fifa and Infantino vowed to press ahead. One Infantino ally described the current stand-off as a “fight to the death”, adding: “He’s not going to bend.”"}],[{"start":277.62,"text":"But by the end of the week, he capitulated, stating that the deal had “created divisions” that were “no longer in the interest of the objective set out in the first place”."}],[{"start":278.12,"text":"News round-up"}],[{"start":288.1,"text":"Amazon completes $50bn investment in OpenAI (FT)"}],[{"start":292.26,"text":"The talent raid that shook New York’s most prestigious law firm (FT)"}],[{"start":295.98,"text":"KKR nears over $4bn deal to buy medical device maker Integer Holdings (FT)"}],[{"start":301.62,"text":"NXP in talks to buy $3bn-plus designer of camera chips for self-driving cars (FT)"}],[{"start":308.06,"text":"Amazon increases AI infrastructure spending to $220bn this year (FT)"}],[{"start":313.46,"text":"Sainsbury’s strikes deal to sell Argos for £120mn to Swift Partners (FT)"}],[{"start":null,"text":""}],[{"start":319.46,"text":"Due Diligence is written by Arash Massoudi, Ivan Levingston, Ortenca Aliaj, Alexandra Heal, Robert Smith and Aaron Kirchfeld in London, James Fontanella-Khan, Sujeet Indap, Eric Platt, Antoine Gara, Amelia Pollard, Kaye Wiggins, Oliver Barnes, Jamie John, Tabby Kinder and Julia Rock in New York, George Hammond in San Francisco and Arjun Neil Alim in Hong Kong. Please send feedback to due.diligence@ft.com"}],[{"start":null,"text":""}],[{"start":347.46,"text":"The AI Shift — John Burn-Murdoch and Sarah O’Connor dive into how AI is transforming the world of work. Sign up here"}],[{"start":353.34,"text":"Unhedged — Robert Armstrong dissects the most important market trends and discusses how Wall Street’s best minds respond to them. Sign up here"}],[{"start":363.3,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1785565702_6848.mp3"}