Headwaters Capital Management Sold Bentley Systems (BSY) by Capturing the M&A Premium

Headwaters Capital Management, an investment management company, released its third-quarter 2025 investor letter. A copy of the letter can be downloaded here. The third quarter results were mainly focused on AI. The portfolio returned -2.7% (-2.9% net) in the quarter compared to a +5.3% gain for the Russell Mid Cap Index. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.

In its third-quarter 2025 investor letter, Headwaters Capital Management highlighted stocks such as Bentley Systems, Incorporated (NASDAQ:BSY). Bentley Systems, Incorporated (NASDAQ:BSY) is an infrastructure engineering software solutions provider. The one-month return of Bentley Systems, Incorporated (NASDAQ:BSY) was -2.62%, and its shares gained 1.72% of their value over the last 52 weeks. On October 13, 2025, Bentley Systems, Incorporated (NASDAQ:BSY) stock closed at $50.85 per share, with a market capitalization of $15.44 billion.

Headwaters Capital Management stated the following regarding Bentley Systems, Incorporated (NASDAQ:BSY) in its third quarter 2025 investor letter:

“Sell: Bentley Systems, Incorporated (NASDAQ:BSY): Bentley Systems was sold during the quarter as the stock appreciated meaningfully on M&A rumors. When the stock reached a price/sales multiple of 13x, the rumored M&A premium was effectively captured in the stock price and the position was sold.”

Bentley Systems (BSY): Revolutionizing Geoscience Data with Seequent Evo

Bentley Systems, Incorporated (NASDAQ:BSY) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 28 hedge fund portfolios held Bentley Systems, Incorporated (NASDAQ:BSY) at the end of the second quarter, compared to 38 in the previous quarter. In the second quarter of 2025, Bentley Systems, Incorporated (NASDAQ:BSY) reported total revenues of $364 million, up 10% year-over-year on a reported basis and 9% on a constant currency basis. While we acknowledge the risk and potential of Bentley Systems, Incorporated (NASDAQ:BSY) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Bentley Systems, Incorporated (NASDAQ:BSY) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered Bentley Systems, Incorporated (NASDAQ:BSY) and shared Conestoga Capital Advisors’ views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

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