Activist hedge fund firm Third Point, led by billionaire investor Daniel Loeb, has withdrawn from its investment in CoStar Group and will not proceed with a planned proxy contest, according to a report by Reuters citing a recent letter and unnamed people familiar with the matter.
The hedge fund had been preparing an activist campaign aimed at reshaping CoStar’s board and refocusing the company on its core commercial real estate data business. However, it concluded that its original investment thesis was no longer valid and decided to fully exit its position.
Third Point’s decision marks a reversal from earlier this year, when it had indicated it would seek board changes and push for strategic and operational restructuring. The fund had criticised CoStar’s expansion into residential real estate platforms, particularly its investments in Homes.com, arguing these initiatives were weighing on profitability and shareholder returns.
The investment case deteriorated alongside CoStar’s share price, which fell sharply in recent months, erasing a significant portion of its market value. The decline intensified pressure on management and strengthened calls from multiple investors for strategic change.
Andy Florance, CoStar’s long-time chief executive, had been a central focus of Third Point’s criticism, particularly regarding capital allocation decisions and compensation levels. The hedge fund argued that continued investment in residential expansion was diluting returns from the core business.
Third Point’s withdrawal also comes despite broader investor activism around the company, including involvement from other hedge funds such as DE Shaw, which had similarly pushed for governance changes and a reassessment of strategy.
The move effectively ends what would have been a renewed activist campaign for Loeb, who has previously targeted major companies including Disney and Intel. In this case, however, the firm concluded that engagement efforts were unlikely to reverse CoStar’s trajectory.
A CoStar representative reportedly did not immediately respond to requests for comment.
