Prosper Stars & Stripes, a long/short equity fund, recently released its third-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the third quarter of 2025, Prosper Stars & Stripes achieved a net return of +9.8%. In comparison, its long/short equity hedge fund peer group, as indicated by the HFRX Equity Hedge (Total) Index (the “HFRX”), reported a total return of +3.8%. Additionally, the long-only small-cap Russell 2000 Index (the “Russell”) had a total return of +12.4%. Year to date, the fund returned +8.6% compared to a total return of +13.6% for the HFRI and +10.4% for the Russell. The Composite’s long book delivered strong performance in both the third quarter and year-to-date 2025. The short book detracted from performance both in the third quarter and year-to-date in 2025. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its third-quarter 2025 investor letter, Prosper Stars & Stripes highlighted stocks such as Transcat, Inc. (NASDAQ:TRNS). Transcat, Inc. (NASDAQ:TRNS) offers calibration and laboratory instrument services. The one-month return of Transcat, Inc. (NASDAQ:TRNS) was -23.90%, and its shares lost 46.48% of their value over the last 52 weeks. On November 27, 2025, Transcat, Inc. (NASDAQ:TRNS) stock closed at $56.22 per share, with a market capitalization of $524.443 million.
Prosper Stars & Stripes stated the following regarding Transcat, Inc. (NASDAQ:TRNS) in its third quarter 2025 investor letter:
“The Composite has increased its exposure to healthcare stocks. The sector has historically delivered strong growth, driven by population expansion, longer life spans, and the application of science and technology to improve quality of life. Since the pandemic, however, healthcare, like several other sectors, has struggled to regain its growth cadence. We expect these headwinds to ease. Within the sector, we most commonly invest in companies that provide the “picks and shovels” to the industry. We believe this strategy captures the sector’s growth trend without relying on the success or failure of any single product or therapy. Many of these businesses have attractive margin structures and strong growth potential. One position the Composite reinvested in is Transcat, Inc. (NASDAQ:TRNS). The company has built an impressive distribution and service platform serving the healthcare sector. We believe trends are poised to accelerate as uncertainty in customer demand during 2025 gives way to a more favorable outlook in 2026. Major pharmaceutical and healthcare supply chain companies have announced significant capex projects, and the push to reshore production to avoid supply disruptions seen during the pandemic remains a government and corporate priority.15 As production moves onshore in the coming years, we believe TRNS will see expanding growth opportunities. Transcat has consistently and successfully replaced in-house capabilities with its own offerings, supported by a national network of highly skilled technicians who are in short supply. In addition, the company’s scale and strong reputation among larger clients give it a classic competitive advantage in winning business from smaller players. We believe this relatively underfollowed stock will surprise to the upside as hundreds of billions in incremental investments announced by the industry materialize over the next few years. Using a mid to high teens EBITDA multiple that is often assigned to share gainers in attractive markets we see the potential for the stock to recover towards $90+ over the next approximately 12 months.”
Transcat, Inc. (NASDAQ:TRNS) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 18 hedge fund portfolios held Transcat, Inc. (NASDAQ:TRNS) at the end of the third quarter, which was 12 in the previous quarter. In the fiscal second quarter of 2026, Transcat, Inc.’s (NASDAQ:TRNS) consolidated revenue was up 21% to $83 million. While we acknowledge the risk and potential of Transcat, Inc. (NASDAQ:TRNS) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Transcat, Inc. (NASDAQ:TRNS) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
