Activist Investor Third Point Reportedly Sells CoStar Group Position

Reuters has reported that the activist investor Third Point has sold its stake in CoStar Group, according to sources familiar with the matter.

According to Reuters, a letter from billionaire investor Daniel Loeb—seen by Reuters—revealed that his hedge fund has exited its position and will no longer engage in a proxy fight after several rounds of back-and-forth in the media, with Loeb saying, "we no longer believe that our original thesis ​holds true today and have disposed of our position in its entirety."

Loeb wrote, "Despite our efforts, CEO Andy Florance has continued what can only ​be seen as ⁠a reckless drain on a majority of the company’s operating income into Homes.com and related acquisitions even as the share price has continued to plummet."

A public spat between Third Point and CoStar began in earnest this January, when Third Point launched its first activist campaign in three years, targeting CoStar's board of directors and the Group's strategy for the residential real estate portal Homes.com. The firm said it wanted to nominate several new directors to CoStar's eight-person board and shut down or sell its residential operations.

Alongside another activist investor, DE Shaw, Third Point accused CoStar's board of being too deferential to Group CEO Andy Florance, allowing CoStar's founder to enter a turf war with Zillow without sufficient pushback or accountability. The firm also argued that Homes.com was an expensive flop while revenue targets and the portal's path to profitability kept changing. Third Point also questioned Florance's "participation award" compensation (circa $40 million in 2024) and "horrendous return on capital".

A Costar Group spokesperson said:

“CoStar Group is focused on executing our proven playbook to build on our momentum as we enter our next chapter of margin expansion and profitable growth. We look forward to continuing to engage with stockholders as we continue to unlock the tremendous value of our digital ecosystem.”