Billionaire investor Daniel Loeb’s hedge fund Third Point has stated it will not pursue a proxy fight with CoStar Group, and has sold its stake in the company, according to an exclusive report from Reuters.
“We no longer believe that our original thesis holds true today and have disposed of our position in its entirety,” Reuters stated Loeb wrote in a letter to investors.
In a statement, a CoStar Group spokesperson responded to the announcement by stating that the company 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,” the statement continued.
The disagreement—which began back in January when Third Point released a letter launching its proxy fight—centered on CoStar’s residential real estate business and Homes.com, stating that the company was losing money on these ventures and needed to exit the residential business entirely, along with nominating a new board of directors.
CoStar responded in a statement where it claimed that “Third Point appears intent on spinning a yarn of Board complacency and ‘quixotic’ investment,” and said the hedge funds’ story is “completely detached from reality.”
“Third Point’s demand that we abandon Homes.com reflects their complete misunderstanding of our business, industry, and the strong progress we are making,” the statement continued.
Third Point had focused on CoStar’s stock value, which has plummeted over 50% over the past 12 months. CoStar agreed to launch a capital review, eventually announcing it would temper investments in Homes.com and make changes to executive compensation—another sticking point for the hedge fund.
A second hedge fund, D.E. Shaw Group, also tossed its hat into the ring, supporting Third Point’s stance. The hedge fund stated in a letter that “change is urgently needed at CoStar to arrest the Company’s prolonged stock price underperformance, increase profitability, and position the Company for durable value creation.”
D.E. Shaw Group has not yet stated whether it is continuing its own disagreement with CoStar.
