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 Ranpak Holdings Corp. (NYSE:PACK). Headquartered in Concord Township, Ohio, Ranpak Holdings Corp. (NYSE:PACK) offers product protection services for e-commerce and industrial supply chains. The one-month return of Ranpak Holdings Corp. (NYSE:PACK) was 52.16%, and its shares lost 25.53% of their value over the last 52 weeks. On August 29, 2025, Ranpak Holdings Corp. (NYSE:PACK) stock closed at $5.28 per share, with a market capitalization of $445.451 million.
Prosper Stars & Stripes stated the following regarding Ranpak Holdings Corp. (NYSE:PACK) in its second quarter 2025 investor letter:
“Ranpak Holdings Corp. (NYSE:PACK) was the largest detractor in our long portfolio during the second quarter of 2025. The company’s core paper-based protective packaging solutions (“PPS”) business operates under a razor/razorblade model: Ranpak provides distributors and end customers PPS systems at a nominal cost, then sells high‑margin, proprietary paper consumables designed to work exclusively with those systems. In addition, Ranpak operates a smaller but rapidly growing automation solutions (“AS”) segment, representing less than 10% of revenue. This business provides end‑of‑line systems that automate box‑sizing and dunnage insertion. We saw two good drivers for the company. First, a material-conversion opportunity. In this case, shifting from plastic to paper packaging – a secular trend that the company benefits from. Second, the revenue model appeared to be improving on an increasing mix of “quasi‑recurring” revenue. The thesis strengthened when Amazon, Ranpak’s largest customer, signed a comprehensive agreement that included taking an equity stake. However, several factors weighed on the stock’s performance. Despite generating strong EBITDA margins of approximately 25%, Ranpak’s capital‑intensive model limits free cash flow (“FCF”) conversion. Combined with high net leverage (about 3.3x) and a sub‑$500 million market cap, these challenges overshadowed the positive aspects of the story. Additionally, early in Q2, market sentiment was pressured by heightened tariff concerns. Following our stop‑loss parameters and reassessment of the near‑term risk/reward, we exited the position.”
