Investor #2 Calls for “Shareholder-Driven Change” at CoStar Group

A second investor has just told CoStar Group leadership to drop Homes.com. 

Investment firm D.E. Shaw published a letter on February 4, 2026, announcing its support for “shareholder-driven change” at CoStar Group, echoing Third Point’s demands. 

Now, despite its dominance in office and apartment data, CoStar Group’s pivot to Homes.com has become a lightning rod for two of the world’s most powerful activists. 

Third Point’s Daniel Loeb published his letter last week, quickly followed by a response from CoStar. Now, D.E. Shaw is backing up Loeb. 

Mike Del Prete posted about the letter on LinkedIn, describing it and its accompanying 58-page slide deck as “fascinating reading.” 

Meanwhile, CoStar Group’s stock value dropped 18% yesterday, hitting a five-year low. 

Here’s what you need to know. 

The Case Against Homes.com

D.E. Shaw’s letter provides a detailed analysis of CoStar’s five-year pivot into single-family housing, a market long dominated by Zillow and Realtor.com. 

Here’s where the friction comes from: 

• The Spend: $3 billion invested to date.
• The Return: Only $80 million in annual revenue against $2 billion in cumulative losses.

Despite CoStar Group’s optimistic revenue projections for 2027 ($700M–$1B), the investor letter argues CoStar’s focus on residential listings has “cannibalized” management attention and salesforce resources from its core CRE business. 

The D.E. Shaw Letter: “Gravely Disappointed”

The letter sent to CoStar’s board is a blunt 2,000-word indictment of what D.E. Shaw calls “prolonged shareholder value destruction.”

That phrase, ‘’value destruction,” comes up a lot in the letter and accompanying slide deck. DelPrete spotted it no less than 21 times.

The core of D.E. Shaws’ argument? CoStar has built a “convenient fiction” regarding its successful expansion into residential real estate. 

While CEO Andy Florance points to historical wins from the last century, D.E. Shaw is looking at the data of the last five years, starting with the performance gap. 

• The CoStar Reality: A cumulative 32% loss for shareholders over the last five years.
• The Market Reality: A 101% gain for the S&P 500 in that same period.
• The Verdict: According to the letter, “Every shareholder who has purchased CoStar’s stock in the last five years has lost money.”

The “CEO Capture” Critique

The letter shifts from the balance sheet to the boardroom, alleging a total lack of oversight. 

D.E. Shaw says the board has been “far too deferential” to CoStar Group CEO Andy Florance, rewarding him with $130 million in compensation over five years despite the stock sitting in the bottom 10% of the S&P 500.

That criticism echoes Third Point in its targeting of executive pay compared to stock performance.

“The independent directors have surrendered too much authority to the CEO they are tasked with overseeing… The Board has also enabled Mr. Florance to avail himself of lavish perquisites… including the use of the Company’s multiple private jets for personal travel at a rate more than three times that of peer company chief executives.”

The $10 Billion Question

Like Third Point, D.E. Shaw projects a path forward for CoStar Group. They estimate that by simply “separating Homes.com” (via a spin-off or sale) and installing fresh, independent leadership, the company could unlock more than $10 billion in shareholder value.

To get there, D.E. Shaw urged the following reforms:

• Board Refresh: Add new independent directors to break “CEO capture.”
• Capital Discipline: Demand stock buybacks and a return to margin expansion in the core business.

Meanwhile, CoStar is labeling the activists’ efforts “dangerously misguided” and comparing their behavior to a “child with a board game.”

Read the full letter here. 

Stay tuned for more as this story develops.