Alger, an investment management firm, published its “Alger Mid Cap Focus Fund” second quarter 2021 investor letter – a copy of which can be downloaded here. During the quarter, the largest portfolio sector weightings for the fund were Information Technology and Industrials. The largest sector overweight was Industrials. Class Z shares of the Alger Mid Cap Focus Fund underperformed the Russell Midcap Growth Index during the second quarter of 2021. You can take a look at the fund’s top 5 holdings to have an idea about their top bets for 2021.
In the Q2 2021 investor letter of Alger, the fund mentioned Bentley Systems, Incorporated (NASDAQ: BSY), and discussed its stance on the firm. Bentley Systems, Incorporated is an Exton, Pennsylvania-based software company, that currently has a $17.8 billion market capitalization. BSY delivered a 59.89% return since the beginning of the year, while its 3-month returns are up by 41.98%. The stock closed at $62.87 per share on August 06, 2021.
Here is what Alger has to say about Bentley Systems, Incorporated in its Q2 2021 investor letter:
“Bentley Systems is a founder-led company with a 36-year track record of creating value with software and services for the design, construction and operation of infrastructure, such as transportation, energy generation, large commercial buildings and other physical assets. The company’s software solutions help bring projects to market faster and more efficiently and include a simulation offering that provides asset owners with valuable information to prolong and improve the life of assets. Penetration of digital workflow in infrastructure engineering remains low and both the project and asset management markets are continuing to adopt digital solutions, driving growth for Bentley at a high single-digit rate and potentially accelerating in the event of a U.S. infrastructure bill being passed into law. We believe that anticipation of a U.S. infrastructure bill is one of the main reasons why Bentley Systems shares outperformed in the second quarter. We believe the company’s acquisition of geosciences software company Seequent also supported the performance of Bentley shares because it provides increased potential for the company to increase its guidance when reporting second quarter results in August.”
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Based on our calculations, Bentley Systems, Incorporated (NASDAQ: BSY) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. BSY was in 22 hedge fund portfolios at the end of the first quarter of 2021, compared to 19 funds in the fourth quarter of 2020. Bentley Systems, Incorporated (NASDAQ: BSY) delivered a 1.30% return in the past month.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 115 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.
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Disclosure: None. This article is originally published at Insider Monkey.
