Prosper Stars & Stripes, a long/short equity fund, recently released its first quarter 2025 investor letter. A copy of the letter can be downloaded here. The fund underperformed and generated a net return of -9.7% compared to a total return of -9.5% for the long-only small cap Russell 2000 Index (the “Russell”), and a total return of 0.2% for the long/short equity hedge fund peer group represented by the HFRX Equity Hedge Index (the “HFRX”). A combination of factors led the composite to underperform compared to its net exposure at the start of the year. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its first-quarter 2025 investor letter, Prosper Stars & Stripes Fund highlighted stocks such as American Superconductor Corporation (NASDAQ:AMSC). American Superconductor Corporation (NASDAQ:AMSC) is a global megawatt-scale power resiliency solutions provider. The one-month return of American Superconductor Corporation (NASDAQ:AMSC) was 21.69%, and its shares gained 12.77% of their value over the last 52 weeks. On June 12, 2025, American Superconductor Corporation (NASDAQ:AMSC) stock closed at $29.23 per share, with a market capitalization of $1.275 billion.
Prosper Stars & Stripes Fund stated the following regarding American Superconductor Corporation (NASDAQ:AMSC) in its Q1 2025 investor letter:
“American Superconductor Corporation (NASDAQ:AMSC) was the largest detractor in the short book during the first quarter of 2025. The company is a system provider of megawatt-scale power resiliency solutions for the power grid, torpedo defense for the Navy, and components for the India wind market. This is an eclectic assortment of businesses with little relation to each other despite steps taken to simplify the company in the past. Further, we were unable to establish a compelling narrative on the market position or performance quality of the company products. Despite using terms like “smart materials” and “smart software and controls,” AMSC’s financial profile is decidedly much more pedestrian than proprietary in our view. In FY24, gross margins were 27-28% and the average between 2017 to 2022 was approximately 15%. Operating margins in FY24 were -1% and between 2017 to 2022, EBIT margins were deeply negative. This history of lack of profits meant AMSC needed to consistently raise capital, which is illustrated via its shares outstanding jumping from 17 million in 2017 to 38 million in 2024. The shares rallied sharply on a quarterly report and outlook that exceeded expectations. Following our stop-loss process, we closed out the position during the quarter.”
A technician in a hard hat using an industrial machine to construct a power grid segment.
American Superconductor Corporation (NASDAQ:AMSC) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 21 hedge fund portfolios held American Superconductor Corporation (NASDAQ:AMSC) at the end of the first quarter, which was 15 in the previous quarter. While we acknowledge the potential of American Superconductor Corporation (NASDAQ:AMSC) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.
In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors. While we acknowledge the potential of AMSC as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
