Martin Shkreli breaks down the SALP collapse, saying 4x leverage left a $45 billion AI fund with no room for error
Martin Shkreli used a July 30 episode of TBPN Podcast to reconstruct the liquidity crisis at Situational Awareness, or SALP, framing it as one of the more notable hedge fund blowups driven by leverage and forced selling. His core point was simple: if a fund is running at roughly 4x leverage, a 25% decline in the book can wipe out equity fast enough for prime brokers to step in and seize control of the portfolio. Shkreli argued that the market had likely started trading against the fund as early as Monday or Tuesday, selling overlapping names and shorting positions SALP was known or believed to own. He said this is standard game theory on Wall Street once counterparties believe a fund must liquidate. In his reconstruction, the fund’s capital base included roughly $35 billion of equity plus about $10 billion of Anthropic private shares, against a total gross book near $120 billion. He said Jane Street, Millennium and Citadel were the three major bidders for the assets, with Citadel ultimately winning. Shkreli’s view was that Citadel could have captured an immediate paper gain of $3 billion to $4 billion if it can absorb the positions cleanly. He also rejected war, oil and other macro narratives as the main cause, saying the real driver was the buying and selling pressure of the marginal 5% of traders, especially when that capital is levered.
