Editor's Note: This article has been updated for accuracy and clarity.
Magnetar Financial—once famous for shorting subprime debt—has quietly morphed into one of the biggest beneficiaries of the AI gold rush. The billionaire hedge fund manager's bet on CoreWeave Inc. (NASDAQ:CRWV) has ballooned from a modest $50 million in convertible notes into a $12.5 billion stake, representing nearly 72% of Magnetar's $20.5 billion portfolio and driving a 145% quarterly gain.
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The Illinois-based fund, which made its name with the infamous "Magnetar trade" during the 2008 financial crisis, is now playing kingmaker in the emerging world of AI infrastructure. Magnetar Financial spotted the opportunity early, when CoreWeave was just an Ethereum (CRYPTO: ETH) miner hoarding Nvidia Corp (NASDAQ:NVDA) GPUs. Those same chips now power the data centers training the world's largest AI models.
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From Debt Deals To AI Dominance
Magnetar's initial move into CoreWeave came via structured loans. In 2024, Magnetar and Blackstone led a $7.5 billion loan to CoreWeave in one of the largest private debt financings ever. When CoreWeave went public in March, Magnetar's convertible notes turned into a massive equity windfall.
As of September 30, Magnetar held 91.4 million shares, or about 23% of CoreWeave, even after trimming its position by roughly 4.4 million shares. That partial sale still delivered a 247% gain, with CoreWeave stock up more than 220% year-to-date.
A Hedge Fund Going Venture
For a fund built on credit arbitrage and relative value, Magnetar's all-in bet on a single AI name is turning heads on Wall Street. Some investors are uneasy with the venture-like nature of the exposure. But for now, the returns are impossible to ignore.
Suppose the 2008 "Magnetar trade" was about profiting from a housing collapse. In that case, the 2025 version may be about powering the rise of artificial intelligence—and Magnetar just proved that in finance, timing is still everything.
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