Nothing to do with watermarks.
CW is the prefix to numbering in the Commonwealth Catalogue, produced by Murray Payne. Bermuda CW 1 is the number for the 1d stamp, the 1st stamp for Bermuda in the Commonwealth King George VI Catalogue.
You can see the numbering (CW and SG) of the various printings of the Bermuda 5/- definitive here:
http://www.kgvistamps.com/articles/...rmuda5sh.htm