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Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the third quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Bentley Systems, Incorporated (NASDAQ:BSY) based on that data.
Is BSY a good stock to buy now? Prominent investors were taking an optimistic view. The number of long hedge fund positions improved by 19 lately. Bentley Systems, Incorporated (NASDAQ:BSY) was in 19 hedge funds' portfolios at the end of the third quarter of 2020. Our calculations also showed that BSY isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
Israel Englander of Millennium Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind let's take a glance at the recent hedge fund action regarding Bentley Systems, Incorporated (NASDAQ:BSY).
Do Hedge Funds Think BSY Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 19 from the previous quarter. The graph below displays the number of hedge funds with bullish position in BSY over the last 21 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Bentley Systems, Incorporated (NASDAQ:BSY) was held by Islet Management, which reported holding $12.6 million worth of stock at the end of September. It was followed by Echo Street Capital Management with a $10 million position. Other investors bullish on the company included Millennium Management, Rivulet Capital, and Sunriver Management. In terms of the portfolio weights assigned to each position Mondrian Capital allocated the biggest weight to Bentley Systems, Incorporated (NASDAQ:BSY), around 1.01% of its 13F portfolio. Sunriver Management is also relatively very bullish on the stock, earmarking 0.88 percent of its 13F equity portfolio to BSY.
As one would reasonably expect, key money managers have jumped into Bentley Systems, Incorporated (NASDAQ:BSY) headfirst. Islet Management, managed by Joseph Samuels, created the biggest position in Bentley Systems, Incorporated (NASDAQ:BSY). Islet Management had $12.6 million invested in the company at the end of the quarter. Greg Poole's Echo Street Capital Management also made a $10 million investment in the stock during the quarter. The other funds with brand new BSY positions are Israel Englander's Millennium Management, Barry Lebovits and Joshua Kuntz's Rivulet Capital, and Will Cook's Sunriver Management.
Let's go over hedge fund activity in other stocks similar to Bentley Systems, Incorporated (NASDAQ:BSY). These stocks are Nikola Corporation (NASDAQ:NKLA), Floor & Decor Holdings, Inc. (NYSE:FND), Repligen Corporation (NASDAQ:RGEN), Wynn Resorts, Limited (NASDAQ:WYNN), Mobile TeleSystems Public Joint Stock Company (NYSE:MBT), XPO Logistics Inc (NYSE:XPO), and AGNC Investment Corp. (NASDAQ:AGNC). All of these stocks' market caps match BSY's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NKLA,17,199530,-12 FND,42,942350,-2 RGEN,35,982491,1 WYNN,43,510257,-2 MBT,10,311140,-1 XPO,39,2338039,-1 AGNC,32,382410,-5 Average,31.1,809460,-3.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.1 hedge funds with bullish positions and the average amount invested in these stocks was $809 million. That figure was $61 million in BSY's case. Wynn Resorts, Limited (NASDAQ:WYNN) is the most popular stock in this table. On the other hand Mobile TeleSystems Public Joint Stock Company (NYSE:MBT) is the least popular one with only 10 bullish hedge fund positions. Bentley Systems, Incorporated (NASDAQ:BSY) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BSY is 31.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on BSY as the stock returned 15.5% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.