By Svea Herbst-Bayliss
NEW YORK, April 10 (Reuters) - Billionaire investor Daniel Loeb's hedge fund Third Point will not pursue a proxy fight at real estate data company CoStar Group and sold its entire stake in the owner of Apartments.com and Homes.com, according to sources familiar with the matter and a letter seen by Reuters on Friday.
The hedge fund changed course at CoStar after it became clear to Loeb and his team that their plans to pressure the company into focusing more squarely on the core
business might not salvage the company after all.
"We no longer believe that our original thesis holds true today and have disposed of our position in its entirety," Loeb wrote in a letter to investors seen by Reuters.
The hedge fund never disclosed the size of its stake but it ranked among the company's 15 biggest investors.
A representative for CoStar Group did not have an immediate comment.
LONG HISTORY OF TARGETING COSTAR
In January, Third Point signaled that it would pursue a board challenge at CoStar, its first activist campaign in three years, to try to force the company to change directors and restructure operations. Third Point had been engaging with the company for some time, the sources said.
Investors have until Sunday to nominate director candidates.
Third Point's frustration with CoStar mounted as its stock price sank from trading near $66 a share in January to $36.48 at the close of trade on Friday. The company's market value has tumbled to $15.3 billion from $28 billion over that period.
Loeb said in January the majority of CoStar's directors would need to be replaced to help cut costs - including the CEO's compensation - and in order to focus on boosting the share price, Reuters reported at the time.
Third Point wanted CoStar to focus on its core commercial business and shut down or sell its residential operation.
For years, Loeb shocked and delighted Wall Street with harsh assessments of corporate America while pushing companies including Walt Disney, Intel and Campbell's to perform better.
He has long taken aim at CoStar CEO Andy Florance and his decision to spend billions of dollars to expand into online classifieds in the residential real estate industry.
On Friday, 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."
Third Point wasn't the only prominent investor to push for changes at CoStar.
Hedge fund D.E. Shaw signaled in February that it was also pushing for new directors and other changes, arguing that the company was losing money because of investment in Homes.com and that a change in leadership was necessary.
Both Third Point and D.E. Shaw reached settlements with CoStar in 2025, which paved the way for new directors to join the board.
(Reporting by Svea Herbst-Bayliss; Editing by Sam Holmes)
