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Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Bentley Systems, Incorporated (NASDAQ:BSY) in this article.
Is Bentley Systems, Incorporated (NASDAQ:BSY) a buy right now? The smart money was taking a bullish view. The number of long hedge fund bets went up by 3 in recent months. Bentley Systems, Incorporated (NASDAQ:BSY) was in 22 hedge funds' portfolios at the end of March. The all time high for this statistic was previously 19. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that BSY isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Matthew Halbower of Pentwater Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind we're going to take a look at the fresh hedge fund action surrounding Bentley Systems, Incorporated (NASDAQ:BSY).
Do Hedge Funds Think BSY Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 16% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in BSY over the last 23 quarters. With hedgies' sentiment swirling, there exists a few notable hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Echo Street Capital Management, managed by Greg Poole, holds the biggest position in Bentley Systems, Incorporated (NASDAQ:BSY). Echo Street Capital Management has a $24.4 million position in the stock, comprising 0.2% of its 13F portfolio. The second most bullish fund manager is Polar Capital, managed by Brian Ashford-Russell and Tim Woolley, which holds a $18.2 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions consist of Paul Marshall and Ian Wace's Marshall Wace LLP, Matthew Halbower's Pentwater Capital Management and Tor Minesuk's Mondrian Capital. In terms of the portfolio weights assigned to each position Southport Management allocated the biggest weight to Bentley Systems, Incorporated (NASDAQ:BSY), around 3.48% of its 13F portfolio. Mondrian Capital is also relatively very bullish on the stock, earmarking 2.12 percent of its 13F equity portfolio to BSY.
Now, key hedge funds were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, assembled the largest position in Bentley Systems, Incorporated (NASDAQ:BSY). Marshall Wace LLP had $11.3 million invested in the company at the end of the quarter. Mario Gabelli's GAMCO Investors also initiated a $6 million position during the quarter. The following funds were also among the new BSY investors: Richard SchimeláandáLawrence Sapanski's Cinctive Capital Management, James Crichton's Hitchwood Capital Management, and Michael Gelband's ExodusPoint Capital.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Bentley Systems, Incorporated (NASDAQ:BSY) but similarly valued. These stocks are LKQ Corporation (NASDAQ:LKQ), Packaging Corporation Of America (NYSE:PKG), UWM Holdings Corporation Class (NYSE:UWMC), Textron Inc. (NYSE:TXT), Masimo Corporation (NASDAQ:MASI), Teva Pharmaceutical Industries Limited (NYSE:TEVA), and InterContinental Hotels Group PLC (NYSE:IHG). This group of stocks' market caps resemble BSY's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LKQ,36,1543090,-14 PKG,29,245296,13 UWMC,19,76660,19 TXT,21,702168,-2 MASI,35,308604,6 TEVA,24,1119017,-2 IHG,8,19947,1 Average,24.6,573540,3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.6 hedge funds with bullish positions and the average amount invested in these stocks was $574 million. That figure was $110 million in BSY's case. LKQ Corporation (NASDAQ:LKQ) is the most popular stock in this table. On the other hand InterContinental Hotels Group PLC (NYSE:IHG) is the least popular one with only 8 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 63. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and still beat the market by 7.7 percentage points. A small number of hedge funds were also right about betting on BSY as the stock returned 25.6% since the end of the first quarter (through 7/16) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.