Here’s Why CoStar Group (CSGP) Stock Declined in the Second Quarter

Baron Funds, an asset management company, released its “Baron Focused Growth Fund” second quarter 2022 investor letter. A copy of the same can be downloaded here. The fund declined 19.91% in the second quarter compared to a 19.55% fall for the Russell 2500 Growth Index. Inflation, the Ukraine war, and interest rate hikes impacted the quarterly performance of the fund. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.

Baron Funds discussed stocks like CoStar Group, Inc. (NASDAQ:CSGP) in the second quarter investor letter. Headquartered in Washington, the District of Columbia, CoStar Group, Inc. (NASDAQ:CSGP) is a commercial real estate information analytics and online marketplace service, provider. On September 12, 2022, CoStar Group, Inc. (NASDAQ:CSGP) stock closed at $78.44 per share. One-month return of CoStar Group, Inc. (NASDAQ:CSGP) was 4.41% and its shares lost 12.20% of their value over the last 52 weeks. CoStar Group, Inc. (NASDAQ:CSGP) has a market capitalization of $31.058 billion.

Here is what Baron Funds specifically said about CoStar Group, Inc. (NASDAQ:CSGP) in its Q2 2022 investor letter:

“Real estate data and marketing platform CoStar Group, Inc. (NASDAQ:CSGP) declined 9.3% in the quarter and penalized performance by 37 bps. We believe CoStar’s share price decline was due to investor concerns over the company’s accelerated investment in its residential platform. We believe this investment should meaningfully accelerate CoStar’s revenue growth through the expansion of its addressable market. Over the next five years, this expenditure could add as much as $1 billion to revenue at a significantly accretive margin. This would result in a 50% increase to today’s $2 billion of revenue and an approximate 75% increase in EBITDA.

The decline was mainly due to CoStar’s share price decline. This was as the company accelerated its investment in its residential business. This investment will hurt earnings in the short term but will significantly expand CoStar’s addressable market longer term. We believe the investment should yield high returns and enhance the company’s growth and free cash flow.”

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CoStar Group, Inc. (NASDAQ:CSGP) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 47 hedge fund portfolios held CoStar Group, Inc. (NASDAQ:CSGP) at the end of the second quarter which was 44 in the previous quarter.

We discussed CoStar Group, Inc. (NASDAQ:CSGP) in another article and shared Weitz Investment Management’s views on the company. In addition, please check out our hedge fund investor letters Q2 2022 page for more investor letters from hedge funds and other leading investors.

Disclosure: None. This article is originally published at Insider Monkey.