Prosper Stars & Stripes’ Short Thesis Bet on Flywire Corp. (FLYW) Paid Off

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 Flywire Corporation (NASDAQ:FLYW). Headquartered in Boston, Massachusetts, Flywire Corporation (NASDAQ:FLYW) is a payments enablement and software company. The one-month return of Flywire Corporation (NASDAQ:FLYW) was -5.02%, and its shares lost 32.77% of their value over the last 52 weeks. On June 12, 2025, Flywire Corporation (NASDAQ:FLYW) stock closed at $10.79 per share, with a market capitalization of $1.312 billion.

Prosper Stars & Stripes Fund stated the following regarding Flywire Corporation (NASDAQ:FLYW) in its Q1 2025 investor letter:

“Flywire Corporation (NASDAQ:FLYW) was the second-best contributor in the short book during the first quarter of 2025. Flywire is a payment platform that makes it easier for consumers and businesses to send and receive money across countries, especially for specific industries like education (e.g., paying tuition fees) and travel (e.g., booking accommodations). We have been skeptical of the value-added service of the company and were aware that international travel and student visas were seeing pressure from markets, including Canada and Australia. These challenges caused a significant reduction in guidance for FY25 reported on the company’s Q4 2025 call in early 2025. Management guided for 10 to 14% constant currency top-line growth compared to the expected 20%+. Further, uncertainty around student visas in the U.S. also caused management to take a more cautionary tone to their 2025 outlook. We closed our short shortly after quarter end, as we believed the short thesis had played out in the near term.”

Is Flywire Corp. (FLYW) the Best Affordable Tech Stock to Buy According to Analysts?

A digital tablet presenting various payment options alongside an educational lecture on the benefits of diverse capabilities.

Flywire Corporation (NASDAQ:FLYW) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 36 hedge fund portfolios held Flywire Corporation (NASDAQ:FLYW) at the end of the first quarter, which was 34 in the previous quarter. While we acknowledge the potential of Flywire Corporation (NASDAQ:FLYW) 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 another article, we covered Flywire Corporation (NASDAQ:FLYW) and shared Carillon Eagle Small Cap Growth Fund’s views on the company. 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 FLYW 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.