Margins
“This isn't the last situation I will have to deal with this week” - John Tuld (Margin Call)
Editor’s Note: having tied the knot earlier this summer, I sympathise with Leopold Aschenbrenner’s last minute wedding challenges -
MAJOR EARNINGS.
Exxon & Chevron reported a combined - incredible, but expected - Q2 earnings of $26.5BN, on higher realised upstream & downstream prices, as the war in the Middle East continues.
Despite Exxon being more exposed to the Middle East than some of its larger peers (Strait of Hormuz closure reduced production by ~750kboed), production ex-Middle East was strong.
Chevron had the better quarter of the two, with much strong than expected US downstream results, reflecting strong refining & chemicals volumes + margins, helped by export / policy tailwinds (Jones Act relief, etc.).
Ironically, the geopolitical tailwinds - driving these heighten levels of success - are shifting at home; in the weeks leading up to earnings, Trump ordered a DoJ probe into domestic energy price gauging, calling out Exxon & Chevron specifically.
While these politcal events are - and will continue to be - out of the control of management, it’s clear that levers within their control are being executed to perfection -
AWARENESS.
Leopold Aschenbrenner - professionally - had a rough week.
Putting this week aside, he had been on one of the best two-year runs in recent history.
It all kicked off on June 4th, 2024:
Leopold publishes: SITUATIONAL AWARENESS: The Decade Ahead
He goes on Dwarkesh - for 4.5 hours - outlining what is to come in AI
He announces he is setting up a hedge fund to bet on it
What he wrote & said was compelling: >10MM people saw the Tweet, listened to the Pod, or read his document.
The initial result:
As a 22yr-old, he was able to initially raise >$200MM for his fund
His initial investors were up 10x from inception on June 30th ‘26
His fund was up >400% in H1 ‘26
Along the way, Leopold discovered fund leverage…
…unfortunately, before he could develop a situational awareness of volatilty.
Last week, he navigated margin calls from his lenders with a block sale of much of his public portfolio to Citadel.
However, Leopold did manage to - in his own words - live to fight another day (and attend his wedding) -
OTHER.
IYKYK: very entertaining post, on many levels
Love to see an Alpine High reference
Final thought on Aschenbrenner: I think he’ll continue to be ahead of AI-related catalysts / trends, and I think he’s very well liked by many Anthropic employees, who will likely invest in him once they have liquidity, which means that he has a chance to pull this off -