Chip Stocks Crash, $20B Fund Margin Called, Frontier Labs: SLOW DOWN AI, Mamdani's Grocery Stores

**Jason Calacanis** (0:00)
All right, everybody, welcome back. Welcome back to the number one podcast in the world.
The Core Four, fantastic four, the original quartet is here.

**Chamath Palihapitiya** (0:10)
Did we peak at number two or number three last week? Is that what happened?

**Jason Calacanis** (0:15)
I think it was number four in the world. So yeah, usually we're number one in the world.

**David Friedberg** (0:21)
US trending.

**Jason Calacanis** (0:22)
US trending. We're usually number one globally, but yeah, and sometimes number four US.

**Chamath Palihapitiya** (0:26)
I forgot my Starlink, so let me apologize to everybody.

**Jason Calacanis** (0:29)
That was a critical era when you're on the road or on the water, but you know, it'll be fine.

**Chamath Palihapitiya** (0:34)
I had five huge leads come in this week.

**Jason Calacanis** (0:36)
The Glengarry, Glen Ross leads.

**Chamath Palihapitiya** (0:37)
Five big enterprise leads. Enterprise sales is a bear because it's super chunky, but the deals are ginormous.

**Jason Calacanis** (0:44)
Sacks, you got any advice for Chamath from your enterprise sales days? You closed some of those big seven-figure deals when you were doing Yammer.

**David Sacks** (0:51)
No leverage. Don't put on leverage.

**David Friedberg** (0:55)
No leverage. No leverage will be taken. That's the name of the show today.

**Jason Calacanis** (0:59)
Leverage equals risk of ruin.

**David Sacks** (1:02)
PSA, no leverage.

**Chamath Palihapitiya** (1:03)
I have the situational awareness to not lever up.

**David Sacks** (1:07)
That's good. You want that situational awareness?

**David Friedberg** (1:09)
I mean, it's out there.

**Jason Calacanis** (1:12)
If you name your fund situational awareness, that's come on the pot anytime, Leopold. All right, everybody, we got to talk about leadership stocks crashing after an all-time run-up, and we had a major hedge fund get margin called and some incredible margin calls happening in South Korea. Leopold Aschenbrenner is a 25-year-old hedge fund manager. He left OpenAI two years ago to start his own fund, and apparently, according to reports, this is breaking news on Thursday when we tape, he got margin called and had to sell his entire public portfolio to cover massive losses caused by his leverage. And who bought them? None other than Citadel's Ken Griffin. We don't know if it was Ken Griffin himself, but Citadel bought it according to the early reports. Leopold had insane returns and he rode the wave of AI and chips and Frontier Labs as recently as this month, and he started the fund with but $225 million in 2024 He grew it 100x to 20 billion this year or so, ran it all the way up to $45 billion. Now he's at 200x earlier this month by trading on leverage according to our friends at CNBC at the end of the June, who's reportedly up 4x, 450% this year.
Some have reported that he's also selling his massive entropic stake to cover these losses, but the Wall Street Journal is disputing it. Again, we're happy to have him here on the program. How did this all blow up? Well, NASDAQ's chip index, this is called the Philadelphia Semiconductor Index, is down over 20% over the last month. That's bear market territory, obviously. Definition of bear market territory for those of you who don't play in the markets is anything over 20%.
The index included the top 30 US listed chips. That's people like NVIDIA, TSMC, AMD, Micron, you know all those big names. But the index bounced back a bit today up 7% when we're taping. So we may have found a bottom. Unfortunately for Leopold, he had already sold Samsung and SK Hynex, two South Korean chip companies that are not included in the NASDAQ index also got smashed, crushed, demolished. Samsung down 38% over last month, SK Hynex down 14% since going public three weeks ago. The Kospi, that's South Korea's version of the S&P 500 is down over 40% in the last 40 days between last Friday and Wednesday. Leading chip companies shed over a trillion dollars in market cap combined. So to put this in context, chip stocks had a legendary run the past couple of years, but you know, trading on leverage, and we'll talk about it. Very dangerous. If there's a downturn, we'll get into the South Korea wrinkle as well. Even with this downturn, the five-year results are still spectacular. Summoth Micron up 850% mostly in the last year, NVIDIA up 875% in the last five years, and Broadcom up 663%.
Let's discuss it.

**Chamath Palihapitiya** (4:15)
If I was going to give you one piece of advice when you're running risk is, you have to manage leverage incredibly carefully, because when it runs ahead of you, the unwind is incredibly violent and it's incredibly quick. That's the biggest problem with running either massively levered long or massively levered short. So I don't know to what extent he was running lever, but the rumors are he was running like three and a half turns, which just to give you a sense, when you're running that much risk, a three and four percent move is amplified 12 and 13 But if you saw what's happened in the last three days, a 25 percent move is amplified 75 percent.