This Fund Just Sold $11.5 Million in Clearwater Analytics — Here's What the Move Signals for Software Stocks
Key Points
Dallas-based Scalar Gauge Management sold 524,244 shares of Clearwater Analytics for an estimated $11.5 million in the third quarter.
The transaction marked a full exit from Clearwater, with Scalar Gauge reporting that it owned no more shares as of September 30.
The position accounted for 6.6% of AUM in the prior quarter, making this liquidation significant for overall portfolio composition.
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On Friday, Dallas-based Scalar Gauge Management disclosed in an SEC filing that it sold out of Clearwater Analytics Holdings (NYSE:CWAN) in the third quarter, with an estimated transaction value of $11.5 million.
What Happened
According to a Securities and Exchange Commission (SEC) filing released Friday, Scalar Gauge Management sold its entire holding of 524,244 shares in Clearwater Analytics Holdings during the third quarter. The transaction value was $11.5 million based on the average share price for the quarter.
What Else to Know
Top holdings after the filing:
- NASDAQ:BL: $32.7 million (16.7% of AUM)
- NASDAQ:AVGO: $13.9 million (7.1% of AUM)
- NYSE:FIX: $13.2 million (6.7% of AUM)
- NYSE:FN: $12.8 million (6.5% of AUM)
- NASDAQ:AXON: $11.1 million (5.7% of AUM)
As of Friday's market close, CWAN shares were priced at $18.41, reflecting an approximate one-year decline of 29% and far underperforming the S&P 500's nearly 17% gain in the same period.
Company Overview
| Metric | Value |
|---|---|
| Revenue (TTM) | $551.1 million |
| Net Income (TTM) | $406.4 million |
| Price (as of market close Friday) | $18.41 |
| One-Year Price Change | (19%) |
Company snapshot
Clearwater Analytics Holdings leverages a SaaS business model to deliver mission-critical data aggregation and reporting solutions for institutional investors. It provides SaaS-based solutions for automated investment data aggregation, reconciliation, accounting, reporting, performance measurement, compliance monitoring, and risk analytics. Customers include insurers, asset managers, corporations, institutional investors, and government entities seeking robust investment accounting and analytics capabilities.
Foolish Take
Scalar Gauge Management’s decision to fully exit Clearwater Analytics Holdings in the third quarter seemingly represents an intentional pullback from software names that have struggled to deliver earnings momentum. The sale comes amid its similar exit from Five9, suggesting a broader rotation out of SaaS holdings amid valuation pressure and near-term fundamental weakness.
Clearwater Analytics reported second-quarter revenue of $181.9 million and reported a net loss of $24.2 million, missing analyst expectations and down from net income of $0.3 million one year prior. Meanwhile, its shares have tumbled 29% over the past year—a stark contrast to the S&P 500’s 17% gain. In its investor commentary, Scalar Gauge acknowledged that small- and mid-cap software valuations have compressed below 2022 levels, even as profitability improves. Despite calling enterprise software one of the “most attractive segments of the economy,” the firm appears to be trimming exposure until sentiment stabilizes.
For long-term investors, the move highlights a common tension in growth investing: Near-term volatility often obscures long-run potential. As digital transformation and AI adoption continue accelerating, disciplined reentry, rather than capitulation, could prove the smarter play.
Glossary
AUM: Assets under management; the total market value of investments managed by a fund or firm.
13F reportable assets: Securities that investment managers must disclose in quarterly SEC filings if they manage over $100 million.
Liquidation: The process of selling off an investment position, often fully exiting a holding.
Transaction value: The total dollar amount received from selling or buying securities in a single transaction.
Stake: The amount of ownership or investment a fund holds in a specific company.
SaaS: Software as a Service; a business model delivering software via the internet, typically by subscription.
Data aggregation: The process of collecting and combining data from multiple sources for analysis or reporting.
Reconciliation: The process of ensuring financial records from different sources are consistent and accurate.
Performance measurement: Assessing how well an investment or portfolio achieves its financial objectives.
Compliance monitoring: Ongoing checks to ensure investments follow legal, regulatory, and policy guidelines.
Risk analytics: Tools and processes used to identify, assess, and manage potential financial risks in investments.
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 has positions in and recommends Axon Enterprise and Comfort Systems USA. The Motley Fool recommends BlackLine and Broadcom. The Motley Fool has a disclosure policy.
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