What Makes Exponent (EXPO) a Compelling Short Opportunity?

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 Exponent, Inc. (NASDAQ:EXPO). Exponent, Inc. (NASDAQ:EXPO) is a science and engineering consulting company. The one-month return of Exponent, Inc. (NASDAQ:EXPO) was 1.13%, and its shares lost 34.07% of their value over the last 52 weeks. On August 29, 2025, Exponent, Inc. (NASDAQ:EXPO) stock closed at $71.38 per share, with a market capitalization of $3.605 billion.

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

“A consistent short focus has been the devaluation risks facing consulting and outsourcing firms. We have shorted several stocks in this sector, and one we see as having meaningful downside from here is Exponent, Inc. (NASDAQ:EXPO). The company provides expert consultants who advise on lawsuits, patent litigation, and other high-value situations. While the value of their expertise is clear, AI presents two significant challenges. First, AI can systematically and thoroughly reference the most relevant publications, reducing the need for expert input. Second, AI dramatically increases the time efficiency of background work, which we believe will pressure EXPO’s business model, based on billable hours. Although the stock has declined, it still trades at a premium multiple of over 20x EV/EBITDA, compared to many peers trading at 10x or less. As a result, we see a meaningful downside risk if any concerns arise regarding the sustainability of its growth rate.”

Exponent, Inc. (EXPO): Among the Overlooked Dividend Stocks to Buy Now

Exponent, Inc. (NASDAQ:EXPO) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 28 hedge fund portfolios held Exponent, Inc. (NASDAQ:EXPO) at the end of the second quarter, which was 35 in the previous quarter. For the second quarter of 2025, Exponent, Inc.’s (NASDAQ:EXPO) total revenues increased 1% to $142 million. While we acknowledge the risk and potential of Exponent, Inc. (NASDAQ:EXPO) 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 Exponent, Inc. (NASDAQ:EXPO) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered Exponent, Inc. (NASDAQ:EXPO) and shared Conestoga Capital Advisors’ 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.

READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money.

Disclosure: None. This article is originally published at Insider Monkey.