Baron Funds, an investment management company, released its “Baron Growth Fund” first quarter 2023 investor letter. A copy of the same can be downloaded here. In the first quarter, the fund gained 7.88% (Institutional Shares) which exceeded the primary benchmark the Russell 2000 Growth Index’s 6.07% return. It also outperformed the S&P 500 Index’s 7.50% return. The sudden bank failures raised concerns about the health of the US regional banking system. The fund doesn’t own any investments in banks for the past 11 years. The company is focused on investing in businesses with durable competitive advantages. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Baron Growth Fund highlighted stocks like Clearwater Analytics Holdings, Inc. (NYSE:CWAN) in the first quarter 2023 investor letter. Headquartered in Boise, Idaho, Clearwater Analytics Holdings, Inc. (NYSE:CWAN) provides web-based solutions for investment data aggregation, reconciliation, accounting, and reporting services. On June 12, 2023, Clearwater Analytics Holdings, Inc. (NYSE:CWAN) stock closed at $16.54 per share. One-month return of Clearwater Analytics Holdings, Inc. (NYSE:CWAN) was 8.10%, and its shares gained 25.02% of their value over the last 52 weeks. Clearwater Analytics Holdings, Inc. (NYSE:CWAN) has a market capitalization of $4.937 billion.
Baron Growth Fund made the following comment about Clearwater Analytics Holdings, Inc. (NYSE:CWAN) in its first quarter 2023 investor letter:
“During the quarter, we made an initial investment in Clearwater Analytics Holdings, Inc. (NYSE:CWAN), a leading software-as-a-service solution for asset owners and managers. Clearwater’s platform provides automated investment data aggregation, reconciliation, accounting, compliance, risk, performance, and reporting tools for insurers, asset managers, and corporations. Each day, the company reports on more than $6.4 trillion in assets across its base of 1,260 clients. Clearwater is a business that we have been researching for over a year, and the Fund was able to take advantage of market dislocation to initiate an investment at a compelling price.
We estimate that Clearwater serves a total addressable market (TAM) of approximately $6 billion of annual recurring revenue, or more than 16 times larger than its current base of business. We believe that the opportunity to launch new products and serve new customer types will effectively double its TAM over time. Clearwater’s cloud-based multi-tenant platform enables customers to reduce cost, time, and risk relative to their competitors, who frequently use legacy software in combination with manual processes. Clearwater also benefits from network effects related to its single database model where securities are processed once and leveraged across all clients. As such, growth in Clearwater’s client base helps to broaden and deepen the company’s data set and reduces its cost of service. We believe the superiority of its offering is reflected in the company’s win rates, which are approximately 80% in competitive situations. We also believe this is reflected in Clearwater’s 98% gross retention rate and a net promoter score above 60…” (Click here to read the full text)
Photo by Luke Chesser on Unsplash
Clearwater Analytics Holdings, Inc. (NYSE:CWAN) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 19 hedge fund portfolios held Clearwater Analytics Holdings, Inc. (NYSE:CWAN) at the end of first quarter 2023 which was 7 in the previous quarter.
We discussed Clearwater Analytics Holdings, Inc. (NYSE:CWAN) in another article and shared Conestoga Capital Advisors’ views on the company. In addition, please check out our hedge fund investor letters Q1 2023 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.
