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>The idea of a fully automated money manager inspired Li instantly. He met Costa for dinner three days later, saying in an e-mail beforehand that the AI fund “is exactly my kind of thing.”
>Over the following months, Costa shared simulations with Li showing K1 making double-digit returns, although the two now dispute the thoroughness of the back-testing. Li eventually let K1 manage $2.5 billion—$250 million of his own cash and the rest leverage from Citigroup Inc. The plan was to double that over time.
>But Li’s affection for K1 waned almost as soon as the computer started trading in late 2017. By February 2018, it was regularly losing money, including over $20 million in a single day—Feb. 14—due to a stop-loss order Li’s lawyers argue wouldn’t have been triggered if K1 was as sophisticated as Costa led him to believe.