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 Magnite, Inc. (NASDAQ:MGNI). Headquartered in New York, New York, Magnite, Inc. (NASDAQ:MGNI) is an independent omni-channel sell-side advertising platform. The one-month return of Magnite, Inc. (NASDAQ:MGNI) was 16.94%, and its shares gained 88.18% of their value over the last 52 weeks. On August 29, 2025, Magnite, Inc. (NASDAQ:MGNI) stock closed at $25.95 per share, with a market capitalization of $3.695 billion.
Prosper Stars & Stripes stated the following regarding Magnite, Inc. (NASDAQ:MGNI) in its second quarter 2025 investor letter:
“Magnite, Inc. (NASDAQ:MGNI) was the top contributor in our long book during the second quarter of 2025. The company provides technological solutions that automate the purchase and sale of digital advertising (“ad”) inventory. Magnite operates as a supply-side platform (“SSP”), helping publishers – such as websites, mobile apps, and connected TV services – manage, price, and optimize their ad space in real time. On the other side of the market are demand side platforms (“DSPs”), which enable advertisers and agencies to buy digital ad impressions across these channels. MGNI caught our attention for several reasons. First, as the leading, independent SSP, the company provides mission critical solutions to its customers. Second, there is a long tail transition occurring in TV advertising as the market shifts ad dollars from linear to streaming. Magnite has not lost a client since at least 2019 and counts most major streaming service providers as customers, including Netflix, Amazon, and Disney. Third, we believe Magnite’s Display and Video (“DV+”) business will be a primary beneficiary of the Department of Justice’s (“DOJ”) antitrust case against Google. Remedies in the case are expected to be announced on September 22, 2025. Currently, Google holds approximately 60% of this market, while Magnite has the second-largest share at about 6%. For every 1% increase in market share, MGNI’s management believes EBITDA would increase by roughly $50 million. For context, Magnite’s EBITDA was approximately $200 million in fiscal year (“FY”) 2024. We were able to purchase MGNI at a very attractive valuation – less than 6.5x FY2026 EBITDA. Additionally, Magnite boasts approximately 30% EBITDA margins. Given our expectations for upcoming catalysts, we believe MGNI is worth at least $30 per share, at roughly 16x FY2026 EBITDA.”
Magnite, Inc. (NASDAQ:MGNI) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 34 hedge fund portfolios held Magnite, Inc. (NASDAQ:MGNI) at the end of the second quarter, which was 28 in the previous quarter. Magnite, Inc.’s (NASDAQ:MGNI) total revenue for Q2 rose 6% year-over-year to $173 million. While we acknowledge the risk and potential of Magnite, Inc. (NASDAQ:MGNI) 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 Magnite, Inc. (NASDAQ:MGNI) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Magnite, Inc. (NASDAQ:MGNI) and shared Choice Equities Fund’s views on the company. 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.
