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 Materialise NV (NASDAQ:MTLS). Materialise NV (NASDAQ:MTLS) offers additive manufacturing and medical software tools, and 3D printing services. The one-month return of Materialise NV (NASDAQ:MTLS) was 3.92%, and its shares gained 9.00% of their value over the last 52 weeks. On June 12, 2025, Materialise NV (NASDAQ:MTLS) stock closed at $5.57 per share, with a market capitalization of $329.004 million.
Prosper Stars & Stripes Fund stated the following regarding Materialise NV (NASDAQ:MTLS) in its Q1 2025 investor letter:
“Materialise NV (NASDAQ:MTLS) (MTLS or “Materialise”) was the largest detractor in the long book during the first quarter of 2025. Materialise has 3 segments: Manufacturing (~35% of FY24 revenues), Medical (~44%), and Software (~17%). All 3 businesses enable or use additive manufacturing (“AM”) to deliver customized products to end customers. The company spoke enthusiastically about its prospects on their earnings call for the third quarter of 2024, and we believed this was an inflection point. The medical business has been growing far more than the market and at an impressive 30% operating profit margins. The head of the medical business had been promoted to CEO and the company expanded manufacturing substantially in the U.S. to meet growing demand. MTLS’s medical business addresses Cranio-Maxillofacial (“CMF”), a surgical specialty that focuses mainly on trauma. Personalized solutions are far better in our view compared to the existing treatments that require doctors to manually adjust by bending implants to a patient’s facial structure. Unfortunately, after the bullish tone in the 3rd quarter, the company’s manufacturing business had disappointing results in Q4 and missed substantially. The manufacturing business sales declined 3% with negative 1.6% operating margins. Our post-call conversations with management and another reference did not offer reassurance on a strategy to aggressively invest in Medical and downsize Manufacturing. Without a clear line of sight to a recovery, we exited the long positioning respecting our stop loss discipline.”
A medical practitioner examining a 3D-printed model of a patient’s anatomy, made possible with Materialise Manufacturing services.
Materialise NV (NASDAQ:MTLS) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 6 hedge fund portfolios held Materialise NV (NASDAQ:MTLS) at the end of the first quarter, which was 7 in the previous quarter. Materialise NV’s (NASDAQ:MTLS) total revenue in the first quarter increased more than 4% year-over-year to €66.4 million. While we acknowledge the potential of Materialise NV (NASDAQ:MTLS) 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 MTLS 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.
