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A hedge fund wunderkind strayed beyond value investing. Here’s what happened next

Spruce House, founded by two friends from Penn, expanded to bet on growth stocks. The strategy flopped last year, and the hedge fund is still making its way back.

Spruce House founders Benjamin Stein and Zachary Sternberg met at the University of Pennsylvania
Spruce House founders Benjamin Stein and Zachary Sternberg met at the University of Pennsylvania Photo: Michelle Gustafson/Getty Images

In college, Benjamin Stein and Zachary Sternberg devoured Warren Buffett’s annual letters, embracing his value-driven approach to investing.

This guided the undergrads when they started a hedge fund, Spruce House Investment Management, in 2006. It would go on to mint profits and manage billions for clients like the Massachusetts Institute of Technology, the University of Notre Dame and wealthy individuals like hotelier Barry Sternlicht.

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