Mairs & Power, an investment advisor, released the fourth-quarter 2025 investor letter for the “Mairs & Power Small Cap Fund.” A copy of the letter can be downloaded here. In 2025, artificial intelligence (AI) and market concentration dominated the market. Increased investment in technology and AI infrastructure drove rising valuations and corporate spending, leading to bubble-like tendencies. However, easing inflation, a Federal Reserve rate cut in Q4, and resilient corporate earnings provided some optimism. In this environment, the Fund returned 3.98% in 2025, trailing the Russell 2000 Total Return (TR) Index’s 12.81% gain, the S&P Small Cap 600 TR’s 6.02% return, and the Morningstar U.S. Fund Small Blend’s 7.68% gain. Macro headwinds affected smaller companies in 2025, but the second half of the year saw small-cap stocks gain as the labor market softened. Stock selection notably impacted performance, especially in Health Care, Information Technology, and Materials. While sector allocation positively contributed. Looking ahead to 2026, the Fund remains optimistic about small-cap stocks, which are expected to grow at or above the S&P 500’s rate. In addition, please check the Fund’s top five holdings to know its best picks in 2025.
In its fourth-quarter 2025 investor letter, Mairs & Power Small Cap Fund highlighted stocks like Bentley Systems, Incorporated (NASDAQ:BSY). Headquartered in Exton, Pennsylvania, Bentley Systems, Incorporated (NASDAQ:BSY) is an infrastructure engineering software solutions provider. On April 2, 2026, Bentley Systems, Incorporated (NASDAQ:BSY) closed at $34.60 per share. One-month return of Bentley Systems, Incorporated (NASDAQ:BSY) was -13.04%, and its shares lost 10.50% over the past 52 weeks. Bentley Systems, Incorporated (NASDAQ:BSY) has a market capitalization of $10.50 billion.
Mairs & Power Small Cap Fund stated the following regarding Bentley Systems, Incorporated (NASDAQ:BSY) in its fourth quarter 2025 investor letter:
“The Fund added Bentley Systems, Incorporated (NASDAQ:BSY) during the fourth quarter. Based in Pennsylvania, Bentley Systems sells software for the design, build, and management of infrastructure projects (e.g., roads, bridges, water, electricity, transportation, communications, and buildings). We believe Bentley’s software solutions will remain in demand to meet the trillions of dollars being spent on infrastructure projects, with the company gaining market share and improving margins.”
Bentley Systems, Incorporated (NASDAQ:BSY) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 34 hedge fund portfolios held Bentley Systems, Incorporated (NASDAQ:BSY) at the end of the fourth quarter, up from 27 in the previous quarter. In the fourth quarter, Bentley Systems, Incorporated (NASDAQ:BSY) reported total revenues of $392 million, reflecting a 12% increase when reported and a 10% increase in constant currency. 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 the list of stocks Jim Cramer discussed. In addition, please check out our hedge fund investor letters Q4 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.
