Here’s What Pressured Azenta (AZTA) in Q2

Prosper Stars & Stripes, a long/short equity fund, recently released its second quarter 2025 investor letter. A copy of the letter can be downloaded here. The fund underperformed and generated a net return of +9.6% compared to a total return of +8.5% for the long-only small-cap Russell 2000 Index (the “Russell”), and a total return of +5.0% for the long/short equity hedge fund peer group represented by the HFRX Equity Hedge Index (the “HFRX”). For the six months ended 2025, Prosper Stars & Stripes returned a net return of (0.8%) compared to (1.8%) for the Russell and +5.9% for the HFRI. The portfolio demonstrated strong outperformance relative to its net exposure during the quarter. In the second quarter of 2025, US equities reversed the declines seen in the first quarter. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its second-quarter 2025 investor letter, Prosper Stars & Stripes highlighted stocks such as Azenta, Inc. (NASDAQ:AZTA). Azenta, Inc. (NASDAQ:AZTA) engages in the research and development, manufacture, and distribution of pharmaceutical products. The one-month return of Azenta, Inc. (NASDAQ:AZTA) was -5.57%, and its shares lost 38.33% of their value over the last 52 weeks. On August 29, 2025, Azenta, Inc. (NASDAQ:AZTA) stock closed at $30.54 per share, with a market capitalization of $1.4 billion.

Prosper Stars & Stripes stated the following regarding Azenta, Inc. (NASDAQ:AZTA) in its second quarter 2025 investor letter:

“Azenta, Inc. (NASDAQ:AZTA) was the second-best contributor in our short book during the second quarter of 2025. The company operates in the life sciences sector, with a particular focus on sample management solutions (around 48% of FY24 sales) and multiomics (approximately 39% of FY24 sales). Azenta serves pharmaceutical and biotechnology companies, research hospitals, and government institutions. One of our preferred financial measures of business quality is operating profits (EBIT margins). Typically, we expect life science companies to have EBIT margins exceeding 15%. Azenta, on the other hand, has EBIT margins under 7%, which raised a red flag for us. Additionally, the life sciences industry is currently facing pressure from reduced spending at the National Institutes of Health (“NIH”), a challenging biotech funding environment, weakness in China, and uncertainties around the effectiveness of newer modalities such as mRNA and cell and gene therapies (“CGTs”). When Azenta’s stock price declined by about 40%, we took our gains and exited the short position.”

In addition, please check out our hedge fund investor letters Q2 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.