Does Agilysys (AGYS) Have an Open-Ended Growth Trajectory?

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 Agilysys, Inc. (NASDAQ:AGYS). Agilysys, Inc. (NASDAQ:AGYS) develops and markets software solutions and services to the hospitality industry. The one-month return of Agilysys, Inc. (NASDAQ:AGYS) was -5.10%, and its shares lost 3.52% of their value over the last 52 weeks. On August 29, 2025, Agilysys, Inc. (NASDAQ:AGYS) stock closed at $109.12 per share, with a market capitalization of $3.06 billion.

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

"Agilysys, Inc. (NASDAQ:AGYS) was the second-best contributor to our long book in Q2 2025. The company provides point-of-sale (“POS”) and property management (“PMS”) software to the hospitality industry, serving hotels, resorts, cruise lines, and casinos. We have followed the business closely for years and have owned it multiple times. AGYS checks several key boxes. First, its software is embedded in its customers’ operations, driving long-term stickiness and pricing power. Second, it operates in a large total addressable market (“TAM”) of roughly $16 billion. While its share is small, it is growing rapidly, leveraging a modern, cloud-native product against legacy competitors that are underinvesting in both technology and customer service. Third, we believe the business is led by a standout CEO, Ramesh Srinivasan, who has been at the helm since January 2017 and owns approximately 2.9% of outstanding shares through open-market purchases and stock options. A temporary software implementation issue pressured the stock, giving us what we viewed as an attractive entry point. We remain bullish, as we believe AGYS has an open-ended growth trajectory. Our bull-case price target is $150 per share, reflecting 12x FY2026 sales."

Agilysys, Inc. (NASDAQ:AGYS) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 26 hedge fund portfolios held Agilysys, Inc. (NASDAQ:AGYS) at the end of the second quarter compared to 21 in the previous quarter. In the fiscal first quarter of 2026, Agilysys, Inc. (NASDAQ:AGYS) reported revenue of $76.7 million, a 21% increase year-over-year, marking the 14th consecutive quarter of record results. While we acknowledge the potential of Agilysys, Inc. (NASDAQ:AGYS) 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 another article, we covered Agilysys, Inc. (NASDAQ:AGYS) and shared Wasatch Small Cap Growth Strategy's 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.

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