Hedge fund DE Shaw has become the second activist investor to call on CoStar Group to abandon its Homes.com-led residential business, echoing demands made recently by Daniel Loeb’s Third Point, according to a report by RisMedia.
In a 4 February open letter and presentation to CoStar’s board, DE Shaw argued that urgent strategic change is needed to address prolonged share price underperformance, weak profitability and what it described as a deteriorating record of shareholder value creation. The firm said every investor who bought CoStar shares in the past five years is currently sitting on losses.
DE Shaw placed responsibility squarely on CoStar’s continued investment in Homes.com, describing the unit as unprofitable and accusing management of allocating disproportionate resources to the business despite repeated failures to meet projections. The hedge fund said this strategy has eroded margins and weighed heavily on the stock, even as CoStar’s core businesses perform better.
CoStar, which has a market capitalisation of around $22bn, has seen its shares fall more than 23% year-to-date as of 3 February.
The company has rejected the criticism, reiterating comments made in response to Third Point. A CoStar spokesperson said DE Shaw is backing a “dangerously misguided” campaign and defended Homes.com as strategically critical to long-term value creation.
CoStar said management has met with more than 300 shareholders in recent weeks, claiming broad support for its strategy and highlighting the growth potential of its Homes.com AI platform alongside a renewed focus on accelerating EBITDA growth.
