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 Karman Holdings Inc. (NYSE:KRMN). Karman Holdings Inc. (NYSE:KRMN) engages in designing, testing, manufacturing, and sale of mission-critical systems. The one-month return of Karman Holdings Inc. (NYSE:KRMN) was 8.32%, and its shares gained 37.71% of their value in the last three months. On June 16, 2025, Karman Holdings Inc. (NYSE:KRMN) stock closed at $47.51 per share with a market capitalization of $6.28 billion.
Prosper Stars & Stripes Fund stated the following regarding Karman Holdings Inc. (NYSE:KRMN) in its Q1 2025 investor letter:
“The Composite has also invested is several defense stocks that will benefit from stability in overall defense spending and the shifting priorities that emphasize the navy and modernizing weapon systems. As an example, Karman Holdings Inc. (NYSE:KRMN) is a supplier of subsystems for space and launch applications, missiles, and hypersonic weapons. The company expects revenues to grow over 24% in 2025 and to deliver over 30% EBITDA margins.22 We believe this is one of the ways to invest in the need to modernize the US defense industry.”
A satellite being released from a launch vehicle, heading into space.
Karman Holdings Inc. (NYSE:KRMN) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 32 hedge fund portfolios held Karman Holdings Inc. (NYSE:KRMN) at the end of the first quarter, which was 0 in the previous quarter. In the first quarter of 2025, Karman Holdings Inc. (NYSE:KRMN) reported record revenue of $100.1 million, reflecting a 20.6% year-over-year increase. While we acknowledge the potential of Karman Holdings Inc. (NYSE:KRMN) 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 Karman Holdings Inc. (NYSE:KRMN) and shared Baron Discovery 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 KRMN 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.
