Billionaire investor Daniel Loeb’s hedge fund Third Point has launched a proxy fight against CoStar Group, nominating multiple directors to the company’s board and demanding the real estate giant exit its residential business entirely.
In a letter released this morning, Third Point announced it would seek to replace a majority of CoStar’s eight-person board, marking an escalation after a yearlong standstill agreement expired at midnight. The hedge fund, which owns a stake in the $28 billion company, suggested that CoStar fold Homes.com and refocus on its core commercial real estate business.
This move comes after what Third Point characterizes as a year of unmet promises.
“CoStar stands at a critical inflection point,” reads the letter. “Years of strategic blunders, uncontrolled spending, and board inaction have eroded shareholder trust. Immediate, decisive action is required to halt further value destruction and rebuild investor confidence. We look forward to engaging with our fellow long-term shareholders to save CoStar.”
Despite reaching a settlement last year that added two independent directors and created a Capital Allocation Committee, Loeb says that CoStar leadership never intended to address shareholder concerns about the company’s direction and performance.
“During the past year, we have had numerous conversations with management and, in December, sent a detailed (as-yet unanswered) letter to the board expressing continued dismay at the lack of progress,” Loeb wrote. “In fact, so little progress has been made that we are convinced the Company never intended to do any of the things we discussed when we entered into the agreement.”
Third Point’s frustration centers on CoStar’s massive investment in residential real estate. The hedge fund estimates the company has poured roughly $3 billion into Homes.com with “negligible returns,” expecting only about $80 million in revenue from the venture in 2025. Subsequently, CoStar’s stock has declined 27% over the last five years, while the S&P 500 and Nasdaq 100 returned 94% and 98%, respectively, during that same period.
A spokesperson from CoStar Group shared the following statement to RISMedia:
“Over the past year, CoStar Group has conducted extensive engagement with stockholders to inform our updated strategic vision and capital allocation priorities—which have been unanimously approved by the Board and Capital Allocation Committee, including members nominated by Third Point and D.E. Shaw. We enter 2026 with considerable momentum and a clear plan to continue building our core platforms while scaling Homes.com, which is a critical component to our comprehensive digital real estate platform and next chapter of profitable growth.”
“Our 2026 and long-term guidance—which represents sustained, accelerated revenue growth and margin expansion—reflected the Board’s confidence in our ability to enhance stockholder value. We intend to continue to engage with our stockholders, including Third Point, to help them better understand our strategic plan, which has already garnered support from many stockholders and analysts.”
