CoreWeave Turns $50 Million Convertible Notes Into $12.5 Billion AI Jackpot For This Hedge Fund (CORRECTED)

Core Insights - Magnetar Financial has transitioned from shorting subprime debt to becoming a major player in the AI sector, with a significant investment in CoreWeave Inc. that has grown from $50 million to a $12.5 billion stake, representing 72% of Magnetar's $20.5 billion portfolio and resulting in a 145% quarterly gain [2][3][4] Investment Strategy - The initial investment in CoreWeave was made through structured loans, leading to a $7.5 billion loan in 2024, one of the largest private debt financings, which later converted into equity when CoreWeave went public [4][5] - As of September 30, Magnetar held 91.4 million shares of CoreWeave, approximately 23% of the company, despite trimming its position by 4.4 million shares, which still resulted in a 247% gain as CoreWeave's stock increased over 220% year-to-date [5][6] Market Position - Magnetar's shift towards a concentrated investment in a single AI company is notable for a fund traditionally focused on credit arbitrage, raising concerns among some investors about the venture-like nature of this exposure, yet the returns have been substantial [5][6]