Daniel Loeb’s hedge fund Third Point is preparing to launch a new activist campaign against real estate data provider CoStar Group, marking the firm’s first major public activism push in nearly three years, according to a report by Reuters.
The report cite unnamed sources familiar with the matter as revealing that Third Point plans to nominate several new directors to CoStar’s eight-member board, following the expiration of a standstill agreement that had previously limited the fund’s ability to raise concerns publicly.
The New York-based hedge fund, which manages approximately $24bn in assets, is seeking sweeping governance and operational changes at the $28bn market capitalisation company. Third Point is said to believe that a majority of the board should be replaced in order to rein in costs, reassess executive compensation and refocus the business on improving shareholder returns.
At the centre of the campaign is CoStar’s expansion into residential real estate. Third Point wants the company to concentrate on its core commercial property data and analytics franchise and either shut down or divest its residential operations, including Homes.com, which was launched to compete with Zillow.
Sources said Loeb has grown increasingly frustrated with the scale of spending on the residential push, which has involved billions of dollars in investment. Earlier this month, CoStar said it expects to reduce net investment in Homes.com by around $100m annually through to 2030 and announced a $1.5bn share buyback programme, though it provided limited detail on the timing.
Despite these steps, Third Point believes the measures fall short. CoStar’s shares have declined roughly 14% over the past year and are down around 27% over five years, significantly underperforming the broader equity market over the same period.
The hedge fund is also said to see untapped potential in CoStar’s core commercial platform, arguing that pricing adjustments and a greater focus on institutional and international clients could drive improved revenue growth.
Third Point is currently among CoStar’s 15 largest shareholders and has been engaging with the company for some time. Last year, it reached a settlement that resulted in John Berisford, former president of S&P Global Ratings, joining the board. Hedge fund DE Shaw also secured board representation, with former Disney chief financial officer Christine McCarthy appointed as a director, alongside former Etsy finance chief Rachel Glaser.
Those appointments led to the creation of a four-person capital allocation committee, raising investor expectations that strategic alternatives for the residential business would be explored. However, people familiar with the matter said Third Point has been disappointed by the pace of change.
