Why One Investor Just Doubled Down on Clearwater Analytics Stock with a $45 Million Position
Key Points
California-based Tensile Capital Management increased its holding of Clearwater Analytics by nearly 1.2 million shares in the third quarter, resulting in a net position value change of $15.7 million.
At quarter-end, the fund reported holding 2.5 million Clearwater Analytics shares valued at $45.5 million.
Clearwater Analytics now accounts for 5.7% of fund AUM.
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California-based Tensile Capital Management disclosed a purchase of nearly 1.2 million additional Clearwater Analytics shares in a November 14 SEC filing, increasing the position’s value by approximately $15.7 million.
What Happened
According to a filing with the Securities and Exchange Commission dated November 14, Tensile Capital Management LP increased its investment in Clearwater Analytics (NYSE:CWAN) by purchasing nearly 1.2 million shares in the third quarter. The post-trade holding amounted to 2.5 million shares with a quarter-end market value of $45.5 million. The stake now represents 5.7% of the fund’s $800.4 million in U.S. equity assets.
What Else to Know
Top holdings after the filing:
- NASDAQ: VERX: $94.3 million (11.8% of AUM)
- NYSE: DKS: $79.5 million (9.9% of AUM)
- NYSE: VVV: $74.7 million (9.3% of AUM)
- NYSE: LAD: $74.4 million (9.3% of AUM)
- NYSE: USFD: $58.5 million (7.3% of AUM)
As of Friday, CWAN shares were priced at $21.71, down 27.5% over the past year and far lagging the S&P 500, which is up 13% in the same period.
Company Overview
| Metric | Value |
|---|---|
| Price (as of market close Friday) | $21.71 |
| Market Capitalization | $5.55 billion |
| Revenue (TTM) | $640.4 million |
| Net Income (TTM) | $392.5 million |
Company snapshot
- Clearwater Analytics provides SaaS-based solutions for automated investment data aggregation, reconciliation, accounting, and reporting, with Clearwater Prism enabling self-service data access and flexible reporting.
- The company serves insurers, investment managers, corporations, institutional investors, and government entities seeking advanced investment data management and reporting capabilities.
- It delivers scalable solutions to a global institutional client base.
Clearwater Analytics Holdings' scalable SaaS platform streamlines complex investment data processes, offering robust automation and reporting functionality. Clearwater's competitive edge lies in its integrated, real-time data solutions that help clients achieve greater transparency, operational efficiency, and regulatory compliance.
Foolish Take
Tensile's move is an interesting example of a fund positioning around Clearwater’s accelerating fundamentals even as the stock has had a rough year. Clearwater is showing the kind of operating momentum—particularly in recurring revenue and margins—that can make a pullback look more like a recalibration period than a thesis breaker. With revenue up 77% year over year to $205.1 million and adjusted EBITDA up 84% to $70.7 million in the latest quarter, the company is executing well despite its share-price slump.
In that context, Tensile’s decision to build the position to 2.5 million shares signals confidence in Clearwater’s ability to scale its integrated platform and capitalize on demand for AI-driven investment data automation. The company’s annualized recurring revenue similarly surged 77% to $807.5 million, and gross revenue retention remained strong at 98%, showing durability across client segments. Clearwater is also generating meaningful cash—$49 million from operations in the third quarter alone.
For investors, the takeaway is that Clearwater’s fundamentals are materially stronger than its one-year stock chart suggests. If the company sustains this pace of ARR growth, margin expansion, and client wins, the current valuation may offer asymmetric upside relative to peers in the financial software and data infrastructure space.
Glossary
AUM (Assets Under Management): The total market value of investments managed by a fund or investment firm.
Reportable AUM: The portion of a fund’s assets required to be disclosed in regulatory filings, often U.S. equity holdings.
Trailing twelve months (TTM): The 12-month period ending with the most recent quarterly report.
Stake: The ownership interest or number of shares held in a company by an investor or fund.
Quarter-end: The last day of a fiscal quarter, used as a reference point for financial reporting.
CAGR (Compound Annual Growth Rate): The rate at which an investment grows annually over a specified period, assuming profits are reinvested.
SaaS (Software as a Service): A software delivery model where applications are hosted online and accessed via subscription.
Data aggregation: The process of collecting and compiling data from multiple sources for analysis and reporting.
Reconciliation: The process of ensuring two sets of records (usually financial) are in agreement.
Operational efficiency: The ability of a company to deliver products or services in the most cost-effective manner without sacrificing quality.
Regulatory compliance: Adhering to laws, regulations, and guidelines relevant to business operations.
Market value: The current value of an asset or company as determined by the marketplace.
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Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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