Bentley Systems (BSY): Overlooked Vertical Software Leader Positioned for AI Acceleration Soumya Eswaran Tue, October 13, 2026 at 9:36 AM EDT 3 min read BSY +1.08% ^GSPC +0.01% Trade BSY on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
Heartland Advisors, an investment management company, released its third-quarter 2026 investor letter for "Heartland Mid Cap Value Fund". The letter can be downloaded here. Q3 proved challenging for markets as AI trade momentum faltered amid interest-rate and oil-price volatility. Following double-digit Q2 gains, the Russell Midcap Index fell 1.98%, trailing the S&P 500's 2.30% gain. Despite debt concerns and market froth, nearly $1 trillion in tech AI CapEx is projected to boost GDP by 3% and drive 2026 earnings growth. Against this backdrop, the Mid Cap Value Fund fell 4.77% due to drag from Tech and Health Care; management remains anchored in fundamental research, balance sheet strength, and long-term AI infrastructure tailwinds. Also, check the strategy's top five holdings to see its best picks in 2026.
In its Q3 2026 investor letter, Heartland Mid Cap Value Fund highlighted Bentley Systems, Incorporated (NASDAQ:BSY), a newly initiated position during the quarter. Headquartered in Exton, Pennsylvania, Bentley Systems, Incorporated (NASDAQ:BSY) is an infrastructure engineering software solutions provider. On October 12, 2026, Bentley Systems, Incorporated (NASDAQ:BSY) closed at $35.15, with a $10.62 billion market capitalization. Bentley Systems, Incorporated (NASDAQ:BSY) posted a ~7.90% YTD pullback, trading within a 52-week range of $28.08 to $52.85.
Heartland Mid Cap Value Fund stated the following regarding Bentley Systems, Incorporated (NASDAQ:BSY) in its Q3 2026 investor letter:
"Technology. Bentley Systems, Incorporated (NASDAQ:BSY), a newly initiated position during the quarter, is an example of a stock getting heavily discounted by a negative top-down industry narrative, with defensible and compelling long-term prospects. To be clear, we are wary of the outlook for many software products, especially those that serve administrative functions and are prone to faster switching decisions in a widening competitive landscape. Our research has centered on "vertical software" companies that provide end-to-end solutions for a specific industry because domain expertise drives higher customer loyalty and switching costs.
Among the vertical software companies in our universe, we find BSY's characteristics especially attractive from both a "moat" and opportunity perspective. The company provides engineering software for critical infrastructure around the world for public works and natural resources end markets. Over 40 years of proprietary data and deep integration has made BSY the industry standard for infrastructure modeling and simulation. Their software represents roughly five basis points (0.05%) of total project cost for mission critical infrastructure, with BSY's engineering customers facing severe engineering labor challenges and their asset owner customers relying on BSY's software to ensure reliability and minimize expenses while avoiding a high cost of failure. With end market demand buoyed by a need to address structural underinvestment, we expect BSY sales and free cash flow to accelerate further as customers consume more of their offerings for AI-oriented workloads."
Bentley Systems, Incorporated (NASDAQ:BSY) is not on our list of the 40 Most Popular Stocks Among Hedge Funds. According to our database, 31 hedge fund portfolios held Bentley Systems, Incorporated (NASDAQ:BSY) at the end of the second quarter, down from 38 in the previous quarter. While we acknowledge the potential of Bentley Systems, Incorporated (NASDAQ:BSY) 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 discussed Bentley Systems, Incorporated (NASDAQ:BSY) and shared Aoris International Fund's views on the company. In addition, please check out our hedge fund investor letters Q3 2026 page for more investor letters from hedge funds and other leading investors.
This article is originally published at Insider Monkey.
