Clearwater Analytics: Wide Moat in Investment Operations SaaS

Charles Hoeveler of Norwood Capital Partners presented his investment thesis on Clearwater Analytics (NYSE: CWAN) at Wide-Moat Investing Summit 2025.

Thesis summary:

Clearwater Analytics, founded in 2004 and headquartered in Boise, Idaho, is a leading provider of enterprise SaaS solutions for investment operations, recently valued at $7.5 billion enterprise value and $6.7 billion market capitalization. The company’s cloud-native, multi-tenant architecture, built around a single security master across front, middle, and back-office functions, positions it distinctively in the $23 billion and growing investment operations software market. Its competitive advantages include exceptional customer retention (\~98% gross retention), robust net revenue retention (~115%), and consistently high customer satisfaction scores (+60-65 NPS).

Clearwater’s merger with Enfusion creates a combined platform uniquely capable of addressing the full investment lifecycle — from front-office order management and portfolio construction to middle and back-office accounting and reporting. The strategic rationale behind this combination lies in Clearwater’s established excellence in middle and back-office functionalities and Enfusion’s superior front-office solutions, notably in portfolio management systems and real-time data analytics. Integrating these two complementary cloud-native platforms creates the potential for significant market share gains and margin expansion, effectively forming a comprehensive investment operations solution that legacy providers such as SS&C, SimCorp, and BlackRock Aladdin currently lack.

The company’s technological edge centers around its highly scalable and secure single-security master architecture, facilitating accurate, reconciled real-time data across accounting, risk, compliance, and reporting workflows. Clearwater’s investment in artificial intelligence, through the Clearwater Intelligent Console (CWIC), further enhances its competitive position by automating reconciliation, anomaly detection, risk modeling, compliance monitoring, and advanced analytics. These advanced capabilities not only strengthen Clearwater’s moat but also offer differentiated value to institutional asset managers, insurers, and corporate treasuries facing increasing complexity in investment operations.

From a financial perspective, Clearwater has delivered impressive organic growth exceeding 20%, driven by robust incremental EBITDA and free cash flow margins. The company’s disciplined execution and integration roadmap for Enfusion promise even stronger operational leverage and earnings growth. With Clearwater recently trading around $22.40 per share, applying its historical 28x forward EBITDA multiple suggests a potential share price in the mid-$40s by 2027, translating to a compelling internal rate of return (IRR) in the low-30% range.

Overall, Clearwater Analytics represents an attractive long-term investment opportunity, combining high growth potential, significant market opportunity, and a defensible competitive moat reinforced by proven technology, exceptional management, and strategic integration of complementary capabilities.

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About the instructor:

Norwood Capital Partners, LP is a concentrated, fundamental value-based long/short investment fund. Norwood relies on primary research to build a portfolio of dominant businesses trading at a discount to intrinsic value. Norwood is managed by Charles Hoeveler, with 20+ years of experience in institutional asset management.