NEW YORK, April 10 - Third Point, the hedge fund run by billionaire investor Daniel Loeb, will not pursue a proxy fight at CoStar Group and has sold its entire stake in the owner of Apartments.com and Homes.com, according to a letter from Loeb and sources familiar with the situation.
In the investor letter, Loeb said the fund "no longer believe[s] that our original thesis holds true today and have disposed of our position in its entirety." The fund had not publicly disclosed the size of its holding, though it ranked among CoStar's 15 largest investors.
The decision marks a reversal after Third Point signaled in January that it planned to challenge CoStar's board - the hedge fund's first activist campaign in three years - with the objective of replacing directors and restructuring operations to emphasize the company's core business.
Third Point had been engaging with CoStar's management for an extended period, the sources said, and had warned that a broader board turnover would be needed to drive cost reductions and restore shareholder value. Investors were given a window to nominate director candidates, with a deadline through Sunday to submit nominations.
Loeb and his team steered away from the proxy fight after concluding their efforts were unlikely to produce the turnaround they had anticipated. The hedge fund's frustration grew as CoStar's stock fell from roughly $66 per share in January to $36.48 at Friday's close. Over that span, the company's market capitalization contracted to about $15.3 billion from $28 billion.
In his letter, Loeb criticized CoStar's leadership over its heavy investment in residential classifieds, writing that "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."
The hedge fund had advocated that CoStar concentrate on its core commercial real estate business and either shutter or divest its residential operations. Loeb had also argued that changes at the board level - including reductions in executive compensation - were necessary to better align management with shareholder interests.
Third Point was not alone in seeking changes at CoStar. In February, the hedge fund D.E. Shaw publicly signaled its own push for board renewal and operational adjustments, citing losses tied to investment in Homes.com and calling for new leadership. According to the information provided, both Third Point and D.E. Shaw reached settlements with CoStar in 2025, which cleared the way for additional directors to join the company's board.
The unfolding events at CoStar underscore friction between long-standing management decisions and the expectations of activist investors who have been pressing for sharper focus on profitability. Third Point's exit closes one chapter of pressure on the company while other investor initiatives and board developments continue to evolve.
Context and timeline
- January - Third Point indicated plans to pursue a board challenge and push for a strategic refocus at CoStar.
- February - D.E. Shaw also called for new directors and changes related to CoStar's residential investments.
- 2025 - Settlements with Third Point and D.E. Shaw facilitated the addition of new directors to CoStar's board.
- Recent period - CoStar shares fell from near $66 in January to $36.48 at Friday's close, with market value dropping from $28 billion to $15.3 billion.
What remains clear
Third Point has exited its stake and will not move forward with a proxy contest. The hedge fund concluded that its original thesis no longer applied and decided to liquidate the position rather than press for board control. Other investor pressures and board changes have been part of CoStar's recent governance landscape, but the outcome of those efforts will depend on developments beyond Third Point's departure.