Clearwater Analytics Holdings (CWAN) Rallied Following an Acquisition Announcement

Baron Funds, an investment management company, released its “Baron Discovery Fund” fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. The Fund focuses on long-term, competitively positioned companies that are well-managed and have significant potential in untapped markets. The letter also addressed the advancements in AI and how humans define themselves in the changing landscape. In Q4, the fund generated a return of 0.19% (Institutional Shares), underperforming the Russell 2000 Growth Index by 1.03 percentage points. Over the entire year, the fund posted a return of 10.96%, while the Index returned 13.01%. The outperformance of low-quality and short-term price momentum-oriented stocks affected the Fund’s focus on long-term valuation metrics. The top 10 holdings comprised 26.7% of the Fund’s net assets, with cash making up 3.3%. The Fund maintains strong optimism and expects a high-growth, low-inflation environment in 2026. Please review the Fund’s top five holdings to gain insights into their key selections for 2025.

In its fourth-quarter 2025 investor letter, Baron Discovery Fund highlighted stocks like Clearwater Analytics Holdings, Inc. (NYSE:CWAN). Clearwater Analytics Holdings, Inc. (NYSE:CWAN) provides technology solutions for accounting and reporting and is a significant contributor to the fund’s performance in the quarter. On February 2, 2026, Clearwater Analytics Holdings, Inc. (NYSE:CWAN) stock closed at $24.08 per share. Clearwater Analytics Holdings, Inc. (NYSE:CWAN) delivered a 0.04% return in the past month, and its shares are down 15.21% over the past twelve months. Clearwater Analytics Holdings, Inc. (NYSE:CWAN) has a market capitalization of $7.167 billion.

Baron Discovery Fund stated the following regarding Clearwater Analytics Holdings, Inc. (NYSE:CWAN) in its fourth quarter 2025 investor letter:

“Clearwater Analytics Holdings, Inc. (NYSE:CWAN), a provider of portfolio accounting and reporting software, contributed to performance. The company reported solid third quarter 2025 earnings and raised 2025 guidance. Clearwater also announced that a consortium of private equity investors intends to acquire the company, which drove a sharp positive market reaction. We retain conviction and believe Clearwater has meaningful competitive advantages and the potential to compound revenue at attractive rates for several years. The company has an efficient business model that should drive 40%-plus adjusted EBITDA margins over time.”

In another article, we covered Clearwater Analytics Holdings, Inc. (NYSE:CWAN) and shared a list of stocks that could mint millionaires in 2026. 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.