I wrote ACM Research up back in June. Semiconductor equipment company, sells the tools Chinese fabs need to build chips domestically, trading at what I thought was an absurd discount to its own Shanghai-listed subsidiary.I opened that post complaining the stock had run 40% in the two weeks it took me to write it.This one’s been worse. I drafted most of it Tuesday with the stock at $72. Wednesday it closed at $65.30. Thursday it closed at $78.65 and traded up to $81.74 after hours. I’ve rebuilt the math three times in four days and at this point I’ve just accepted that some of these numbers are going to be wrong by the time you read them. Sorry in advance.Anyways…Stock closed June at $126.89. Bottomed Wednesday at $65.30, which is about a ~50% drawdown. Back in the high $70s now. Still roughly ~40% off the high, still up roughly ~100% on the year.What happenedShort version, none of it was stock specific.The AI trade came into question this month. Nvidia laid out AI infrastructure commitments north of $750 billion and instead of taking that as good news everyone started asking whether the demand behind it is real or just a bunch of companies financing each other in a circle. Everything with a chip in it started coming down.Korea has been the center of gravity for all of it. The KOSPI’s been getting taken apart all month, SK Hynix and Samsung are the epicenter, and because Seoul trades hours ahead of New York it’s basically been setting the tone for every semi open over here. SK Hynix printed a record quarter and got sold anyway. When Korea has a bad night, everything with a chip in it opens red here.Then it stopped being a normal selloff and turned into something much dumber.Situational Awareness, lolIf you haven’t been following this one, buckle up, because it’s genuinely one of the great stories.Leopold Aschenbrenner. 25 years old. Columbia valedictorian at 19, joined OpenAI, got fired in 2024 over what OpenAI called improper disclosure of internal information, wrote a 165-page essay about AGI that everyone in the Valley claimed to have read, and then started a hedge fund named after his own essay.No prior trading experience. Zero.The fund went from $225 million to as much as $45 billion in under two years and returned 439% through June. Long AI infrastructure, SK Hynix and CoreWeave and Bloom Energy and some crypto miners, short software. Reportedly levered up to 400%.Then July showed up and took 67% of it.On July 24 he wrote to his investors telling them the selloff was one of the best buying opportunities since early last year and inviting them to commit fresh capital starting August 1. Six days later he was liquidating the entire public book to Citadel at a discount. Fund’s down to something like $10 billion and most of what’s left is a private stake in Anthropic.And the thing is, he wasn’t even wrong…The AI infrastructure thesis has been right for two years. He saw the compute buildout coming earlier than almost anybody and made 439% being right about it. He’s probably still right, honestly. Nothing that happened in July says the buildout isn’t real.He just borrowed so much money against being right that he didn’t get to stay in the trade long enough to collect on it. At 4x levered you don’t get to have an opinion during a drawdown. The margin clerk has the opinion. Once the prime brokers start calling it doesn’t matter what you think SK Hynix is worth in 2028, you’re selling it Thursday at whatever Citadel feels like paying that day.Being right is only half of it. The other half is being able to sit there while you wait to be proven right, and leverage takes that part out of your hands.There’s also a very good conspiracy floating around that Citadel Securities put out a note days before the Fed meeting arguing for a surprise rate hike nobody was expecting, the AI trade cracked, Leopold got margin called, and then Citadel bought his whole book at the lows. The note is real, for what it’s worth. The rest is fintwit doing what fintwit does, and technically Citadel Securities and Citadel the hedge fund are separate entities. Doesn’t matter. Great meme.The actual point, and the reason I’m spending this much space on a hedge fund that has nothing to do with ACM: what started as a correction turned into a deleveraging spiral. One of the biggest forced sellers in the market was dumping a levered book into a falling tape and every correlated thing on the screen went down with it. Then Citadel took the book off his hands and the same names ripped. Market’s up two days running now.That’s it. That’s what happened to this stock.ACM Research has not said a word since July 15, and that was a press release announcing the date of the Q2 call.And they sold it on the bull caseHere’s the part I actually can’t get past.Reporting on the memory rout was pretty specific about the trigger. The selling got set off by fears that China’s CXMT would accelerate its capacity expansion after its IPO, plus reports of Chinese progress on domestic DUV lithography.Read that again.People sold semis because a Chinese chipmaker is about to spend a pile of fresh IPO money building more capacity. And ACM went down with them.ACM sells the tools CXMT buys.Same thing with the lithography story. If China cracks DUV, the biggest bottleneck on domestic fab construction gets smaller and more fabs get built. ASML dropping on that makes sense, that’s ASML’s revenue at risk. ACM sits on the other end and went down with the group anyway, because it’s got a semi equipment label on it and in a week like that one nobody’s reading past the label.The two things that took this from $127 to $65 were, on the merits, reasons to own it.I’ve been adding. Full case below.