THE BIG IDEA
If you spend any amount of time lurking in the finance-related corners of social media, you will often find people blaming a mysterious band of “manipulators” for their problems.
Wall Street doesn’t care about your 5 shares of NVDA. In fact, Wall Street is such a chaotic place that it would be very difficult to organize a coordinated effort to bring down anyone, large or small.
Ask Leopold Aschenbrenner. He was the subject of last week’s Big Idea. This week, we decided to look at the various people and entities in Leopold’s orbit to determine who was trying to help him, and who was trying to hurt him.
The prime brokers
Prime brokers are the ones offering brokerage services, lending, and other operational support to institutional investors such as Situational Awareness. In this case, it was Bank of America, Goldman Sachs, and JPMorgan Chase.
They had nothing to gain by Situational Awareness going bankrupt. It would be one less client paying them fees for their services and interest on loans. In the fateful final days, the prime brokers actively tried to help the fund find its way out of the crisis.
In the end, though, these prime brokers were creditors to Situational Awareness and seeing their billions in loans repaid became more urgent than whatever revenue they were receiving. They called in the loans, causing the fund to rapidly sell off its stock holdings in late July.
Citadel
Hedge fund Citadel stepped in to buy most of the remaining assets, roughly $16 billion, of Situational Awareness, reportedly at a steep discount to market prices (estimates range from 10% to 30% below market value).
Citadel was an opportunistic beneficiary of the collapse of Situational Awareness. However, there is no evidence that they actively pushed Leopold’s fund into a state of distress.
Investors in Situational Awareness
On July 24th, Situational Awareness sent a letter to investors which cited the fund’s 439% YTD gain through the end of June. That letter also explicitly invited investors to wire fresh cash starting August 1st for "one of the best buying opportunities since early 2025". The plea didn’t generate much interest, and it was already too late for that anyway.
On the other side of the coin, there was little to no direct redemption pressure from the fund’s base of wealthy individuals and family offices during the panic. The investors didn’t cause a “bank run” on the fund.
“The market”
In the first half of July, many of the AI infrastructure stocks that Situational Awareness was heavily invested in fell by 20-30%. Not a good look for a fund that was leveraged by 4X.
There is no public reporting of anyone working to push the prices of those stocks down in order to shake Situational Awareness out of its holdings.
Some readers of The Prime Wave may have owned some of those same stocks and sold during the downturn in July. If that was you - Congratulations! You are now a “manipulator”! Your actions helped to push a $45 billion hedge fund into bankruptcy.
In the end, what pushed Situational Awareness over the cliff was its over-leveraged investments in a concentrated group of similar stocks.
Nobody “manipulated” Situational Awareness out of billions of dollars. Everybody was simply looking out for themselves.
SEEN ON THE INTERNETS
A report by the Institute for Family Studies, described as a pro-marriage think tank, was cited by many financial media outlets last week.
For some reason, even the website for the Institute for Family Studies links to a Bloomberg article (which is behind a paywall). However, Yahoo has re-published the article attributed to Bloomberg.
What generated the widespread interest is this main finding:
One-quarter of men aged 18-29 said they trade stocks daily, and almost two-thirds of them (64%) report feeling like failures, according to a study of 2,000 men
When The Prime Wave was in grad school, the professors would often say “correlation does not imply causation”. We were probably meant to assume that active trading in the stock market causes feelings of failure. It could be that guys who feel like failures are drawn to trading in search of success.
OTOH, a lot of these guys have been exposed to stories of people turning a pittance into a small fortune in the stock market. Maybe they see it as a personal failure that their $300 has not magically turned into millions.
NUMBERS ONLY
9.91% | The Procure Space ETF, with its fantastic ticker symbol UFO, was up nearly 10% last week. |
$30.05 | Shares of HP (symbol: HPQ) hit a new 52-week high of $30.05 on Friday. Earlier in 2026 it was making multi-year lows. |
1.2 million | Brokers in Korea reportedly issued margin calls on 1.2 million accounts in July. An estimated 360,000 accounts were completely wiped out in the market crash there. |
SWINGEX INDEX
As of market close on: 7 August 2026
Swingy says: It's August and the index is on zero. Not a bad time to do some resting and relaxing.
Learn more about how the Swingex Index works here.
WATCHER
Stocks highlighted here each week are not recommendations to buy or sell. They are provided as ideas for swing traders to follow up on with their own research.
KRMN (Karman Holdings): Trend reversals can come in different shapes and sizes.
Most of us have personal experience with the dramatic capitulations that we saw in many stocks in late July. Other times they happen more gradually and play out over a period of weeks or months. Aerospace/Defense company Karman Holdings is in that second category.
On the YTD chart above, you can see how KRMN was more-or-less making a series of lower highs along with lower lows. Until it didn’t. Starting in mid-June the shares just chopped sideways.
After the market closed on Thursday, Karman issued an earnings report which included a raised forecast of revenue for the remainder of the year. On Friday, KRMN reached its highest price since the end of May. The tide appears to be turning.
A first stopping point could be the $64-65 area. It would not look like much on the chart and yet that would be about 10% up from here.