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Why Bentley Systems (BSY) Stock is a Compelling Investment Case

Alex Smith
·3 min read

Cooper Investors recently released its Q3 2020 Investor Letter, a copy of which you can download here. During the third quarter of 2020, the fund returned 9.18%, while the benchmark MSCI ACWI was up 6.94%. You should check out Cooper Investors top 5 stock picks for investors to buy right now, which could be the biggest winners of this year.

In the said letter, Cooper Investors highlighted a few stocks and Bentley Systems Inc (NASDAQ:BSY) is one of them. Bentley Systems Inc (NASDAQ:BSY) is a software company. In the last five days, Bentley Systems Inc (NASDAQ:BSY) stock gained 16.7% and on October 19th it had a closing price of $37.882. Here is what Cooper Investors said:

"During the quarter we also participated in the float of Bentley Systems (‘BSY’, US$8bn market cap), the leading vertical market software business serving the infrastructure industry. Its tools are used across the design, construction and operations continuum for assets like roads, bridges and energy or water utilities.

The initial free float of the business remains small with a further capital raise planned for later in the year, so for now this remains a starter position which we will aim to build up over time.

The business was founded by the four Bentley Brothers – Barry, Keith, Ray and Greg – in 1984. Today Greg remains CEO with Keith and Ray in key executive roles. All four are board members and the family continues to own two thirds of the company. Across our Watchlist and portfolios we have built a deep reservoir of knowledge and pattern recognition around vertical market software businesses like BSY.

These business models possess attributes which tend to manifest themselves with favourable economics and hence attractive returns for shareholders, including well defined oligopolistic markets, high barriers to entry due to deep domain expertise, and recurring revenues due to the mission critical nature of the software. For BSY this is best expressed by their track record of >30% Return on Funds Employed and mid-to-high single digit organic growth – we expect these trends to continue for the foreseeable future. An added kicker for BSY is the fact that digitisation of the construction industry remains very low and so there is a material penetration opportunity."

16 Most Technologically Advanced Countries in the World in 2017
16 Most Technologically Advanced Countries in the World in 2017

everything possible/Shutterstock.com

Our calculations showed that Bentley Systems Inc (NASDAQ:BSY) isn't ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds' poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

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 10 most profitable companies in the world 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 enewsletter below to receive our stories in your inbox:

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