Here’s Why Accelerant Holdings (ARX) Declined in Q3

ARX -0.14%

Prosper Stars & Stripes, a long/short equity fund, recently released its third-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the third quarter of 2025, Prosper Stars & Stripes achieved a net return of +9.8%. In comparison, its long/short equity hedge fund peer group, as indicated by the HFRX Equity Hedge (Total) Index (the “HFRX”), reported a total return of +3.8%. Additionally, the long-only small-cap Russell 2000 Index (the “Russell”) had a total return of +12.4%. Year to date, the fund returned +8.6% compared to a total return of +13.6% for the HFRI and +10.4% for the Russell. The Composite’s long book delivered strong performance in both the third quarter and year-to-date 2025. The short book detracted from performance both in the third quarter and year-to-date in 2025. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its third-quarter 2025 investor letter, Prosper Stars & Stripes highlighted Accelerant Holdings (NYSE:ARX). Accelerant Holdings (NYSE:ARX) is a data-driven risk exchange that connects selected specialty insurance underwriters with risk capital partners. The one-month return of Accelerant Holdings (NYSE:ARX) was 28.55%, and its shares lost 32.36% of their value over the last three months. On November 27, 2025, Accelerant Holdings (NYSE:ARX) stock closed at $14.59 per share, with a market capitalization of $3.236 billion.

Prosper Stars & Stripes stated the following regarding Accelerant Holdings (NYSE:ARX) in its third quarter 2025 investor letter:

"Accelerant Holdings (NYSE:ARX) was the largest detractor in the long book during the third quarter of 2025. The company operates a specialty insurance marketplace connecting Managing General Agents (“MGAs”), the supply, and risk capital providers, the demand. Accelerant provides operational and regulatory support with a five-year commitment of table underwriting capacity to MGAs. And for risk capital providers, the company provides cost effective access to a diversified portfolio of small commercial specialty premiums. Revenue growth is primarily a function of Exchange Written Premiums (“EWPs”). It is presented as a low-risk model with recurring revenues. ARX was a recent IPO with growth opportunities due to its recent track record and potential of the business model. Despite pre-releasing most of its first quarter as a public company, the full report detailed a few items that investors took issue with. Specifically, questions about a large contribution to growth from a related party was concerning and the stock fell. We exited our position noting increased risks and that the company did not handle its initial phase as a public company well."

Accelerant Holdings (NYSE:ARX) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 29 hedge fund portfolios held Accelerant Holdings (NYSE:ARX) at the end of the third quarter, which was 0 in the previous quarter. While we acknowledge the potential of Accelerant Holdings (NYSE:ARX) 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.

In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

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