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 Sphere Entertainment Co. (NYSE:SPHR). Sphere Entertainment Co. (NYSE:SPHR) is a US-based live entertainment and media company. Sphere Entertainment Co.’s (NYSE:SPHR) one-month return was 8.53%, and its shares lost 2.77% of their value over the last 52 weeks. On August 29, 2025, Sphere Entertainment Co. (NYSE:SPHR) stock closed at $45.31 per share, with a market capitalization of $1.631 billion.
Prosper Stars & Stripes stated the following regarding Sphere Entertainment Co. (NYSE:SPHR) in its second quarter 2025 investor letter:
“Sphere Entertainment Co. (NYSE:SPHR) was the largest detractor in our short portfolio during the second quarter of 2025. The company operates two primary business units: the Sphere entertainment venue in Las Vegas, NV, with a capacity of approximately 17,500, and MSG Networks (“MSGN”), a regional sports network focused on the greater New York City metro area. While the Las Vegas Sphere has garnered rave reviews from fans and stands out as a technological marvel, we believe its unit economics are complex and challenging. The venue’s construction cost approximately $2.3 billion, and the development of ‘Postcard from Earth’ alone incurred expenses of around $80 million over nearly 15 months. Given Las Vegas’s intensely competitive entertainment market and heightened economic sensitivity, we believe the path to sustainable profitability is uncertain. MSG Networks, the company’s other major asset, controls content distribution rights to broadcast partners. However, we see the continued unraveling of the traditional cable bundle as placing significant strain on MSGN’s business model. We believe the sustainability of these assets’ value is increasingly doubtful. Additionally, Sphere carries roughly $1.3 billion in debt and is consuming cash at a substantial rate. Moreover, the majority owner, the Dolan family, has a notable history of eroding shareholder value, further amplifying risk. Unfortunately, during the quarter, the company announced a series of debt transactions that the market perceived positively. As a result, we exited our short position in line with our stop-loss framework, preserving capital while remaining cautious on the company’s outlook.”
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