This Software Stock Is Down 20% in a Year and Just Became One Fund's $6 Million Bet
Key Points
Massachusetts-based TFJ Management added 357,043 shares of Clearwater Analytics in the third quarter.
The move represented a 4.3% change in reportable U.S. equity assets under management.
The shares were valued at $6.43 million as of September 30.
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On November 13, Massachusetts-based TFJ Management disclosed a new position in Clearwater Analytics (NYSE:CWAN), acquiring 357,043 shares valued at $6.43 million.
What Happened
TFJ Management disclosed a new position in Clearwater Analytics (NYSE:CWAN), acquiring 357,043 shares worth $6.43 million, according to a quarterly report filed with the U.S. Securities and Exchange Commission on November 13. The position represented 4.3% of the fund’s reportable assets at quarter-end.
What Else to Know
Top holdings after the filing:
- NASDAQ: APP: $39.15 million (26.4% of AUM)
- NYSE: CPNG: $25.14 million (16.9% of AUM)
- NYSE: KAR: $17.80 million (12.0% of AUM)
- NASDAQ: CCC: $12.46 million (8.4% of AUM)
- NYSE: HGV: $11.13 million (7.5% of AUM)
As of Friday, CWAN shares were priced at $22.25, down 20% over the past year and well underperforming the S&P 500, which is up 16.5% in the same period.
Company Overview
| Metric | Value |
|---|---|
| Revenue (TTM) | $640.38 million |
| Net Income (TTM) | $392.54 million |
| Price (as of market close Friday) | $22.25 |
| One-Year Price Change | (20%) |
Company Snapshot
- Clearwater Analytics provides SaaS-based automated investment data aggregation, reconciliation, accounting, and reporting solutions, including Clearwater Prism for self-service data access and flexible reporting.
- The company operates a subscription-based business model, generating recurring revenue from cloud-based software offerings tailored for investment data management and analytics.
- It serves insurers, investment managers, corporations, institutional investors, and government entities seeking advanced investment accounting and risk analytics capabilities.
Clearwater Analytics is a leading provider of cloud-based investment accounting and analytics software, serving a diverse institutional client base. The company leverages a scalable SaaS platform to deliver automated, real-time investment data solutions that streamline compliance, performance measurement, and risk management. Its technology-driven approach positions it competitively in the financial software sector, supporting mission-critical operations for clients managing complex investment portfolios.
Foolish Take
At more than 4% of assets, this is not a watchlist name or a speculative flyer. It lands squarely among the fund’s larger holdings, alongside volatile growth bets like AppLovin and Coupang. That context suggests this is a view on business quality more than a short-term read on the stock.
The fundamentals help explain why. In the third quarter, Clearwater Analytics reported revenue of $205.1 million, up 77% year over year, and adjusted EBITDA jumped 84% to $70.7 million, with margins expanding to 34.5%. Annualized recurring revenue reached $807.5 million, up 77%, while net revenue retention held at a solid 108%. Cash flow was strong enough to fund $40 million in debt repayment during the quarter, and management reiterated full-year guidance calling for roughly $730 million in revenue and $247 million in adjusted EBITDA.
For patient investors, this is a business growing fast, throwing off cash, and gaining share in a niche most investors underestimate. The stock may still be working through last year’s highs, but the operating story is moving faster than the tape.
Glossary
Assets under management (AUM): The total market value of investments managed on behalf of clients by a fund or firm.
Reportable U.S. equity assets: The portion of a fund’s U.S. stock holdings that must be disclosed in regulatory filings.
Stake: The ownership interest or amount of shares held in a particular company or asset.
Quarterly report: A financial statement filed every three months, detailing a company or fund’s performance and holdings.
SaaS (Software as a Service): A software delivery model where applications are accessed online via subscription rather than installed locally.
Reconciliation: The process of ensuring financial records or data from different sources match and are accurate.
Institutional investors: Organizations such as pension funds, insurance companies, or endowments that invest large sums of money.
Risk analytics: Tools or processes used to identify, measure, and manage potential risks in investment portfolios.
Compliance: Adhering to laws, regulations, and internal policies in financial operations and reporting.
Mission-critical operations: Essential business activities that are vital for an organization’s functioning and success.
Cloud-based: Services or software delivered over the internet, rather than hosted on local servers or computers.
TTM: The 12-month period ending with the most recent quarterly report.
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Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool recommends Coupang. The Motley Fool has a disclosure policy.
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