Third Point has decided not to proceed with a proxy contest at CoStar Group and has liquidated its entire holding in the real estate data and listings company, according to people familiar with the matter and a letter reviewed by the publication. The hedge fund’s leader, Daniel Loeb, told investors that the firm no longer believes its activist thesis applies and has therefore disposed of the position in full.
In the investor letter, Loeb wrote: "We no longer believe that our original thesis holds true today and have disposed of our position in its entirety." The hedge fund did not reveal the exact size of the stake it previously held, but sources said it had been among CoStar’s 15 largest shareholders.
Background and campaign intentions
Earlier this year, in January, Third Point indicated it would seek to replace directors at CoStar and press for operational restructuring. The planned campaign would have been Third Point’s first public activist effort in three years and was aimed at narrowing CoStar’s focus toward its core commercial real estate data business.
Third Point’s proposal included calls to curb spending in the company’s residential classifieds operations and to consider shutting down or selling the residential unit. The fund also argued for director turnover and reductions in executive pay as levers to cut costs and lift the share price.
Why Third Point changed course
According to the letter and conversations with people briefed on the situation, Loeb and his team concluded that their efforts were unlikely to produce the outcomes they had anticipated. Their assessment was shaped by ongoing developments at the company and by the pace of deterioration in the equity’s market performance, leading the hedge fund to abandon the proxy route and exit the investment entirely.
Loeb also criticized the company’s spending on its residential business, writing: "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."
Market impact and investor pressure
Third Point’s withdrawal comes after CoStar shares fell sharply from trading near $66 in January to $36.48 at Friday’s close. Over that span, CoStar’s market capitalization declined to about $15.3 billion from roughly $28 billion.
Third Point was not the only shareholder advocating change. Hedge fund D.E. Shaw also indicated in February that it was pressing for new directors and other alterations, asserting that investments in Homes.com had contributed to losses and that fresh leadership was necessary. Both Third Point and D.E. Shaw reached settlements with CoStar in 2025 that cleared the way for new directors to join the board.
Company representatives did not provide an immediate comment on Third Point’s exit.
Next procedural steps
Investors have until Sunday to nominate director candidates, the window noted by people familiar with the process. How the board nomination timeline and the recent settlements will translate into board composition and operational change remains to be seen.
Key points
- Third Point sold its entire position in CoStar Group and will not pursue the planned proxy fight after concluding its activist thesis no longer applies.
- CoStar’s shares fell from near $66 in January to $36.48 at last Friday’s close, shrinking market value from about $28 billion to $15.3 billion over the same period.
- Other investors, including D.E. Shaw, have also pushed for board and strategic changes; settlements in 2025 enabled new directors to be considered for the board.
Risks and uncertainties
- Uncertainty around board nominations - Investors have a limited window to nominate directors, and outcomes depend on forthcoming nominations and any subsequent votes.
- Operational direction and capital allocation - The company’s ongoing investment decisions in its residential unit pose execution and profitability risks for its core business and the broader commercial real estate data sector.
- Market reaction and valuation pressure - Continued share-price volatility and investor activism could affect CoStar’s market valuation and investor confidence in the near term.
This report presents the events and statements as detailed in investor communications and by parties familiar with the situation. It does not add or infer facts beyond those communicated by the sources and the investor letter.