Lakehouse Capital, a Sydney-based investment manager, released its “Lakehouse Global Growth Fund” February 2023 investor letter. A copy of the same can be downloaded here. Despite ongoing economic uncertainty and rising bond yields over the month, the fund returned 1.3% net of fees and expenses compared to a 1.5% return for the MSCI All Country World Index benchmark. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Lakehouse Capital highlighted stocks like CoStar Group, Inc. (NASDAQ:CSGP) in February 2023 investor letter. Headquartered in Washington, the District of Columbia, CoStar Group, Inc. (NASDAQ:CSGP) provides information, analytics, and marketplace services to commercial real estate. On April 26, 2023, CoStar Group, Inc. (NASDAQ:CSGP) stock closed at $71.92 per share. One-month return of CoStar Group, Inc. (NASDAQ:CSGP) was 5.53%, and its shares gained 9.87% of their value over the last 52 weeks. CoStar Group, Inc. (NASDAQ:CSGP) has a market capitalization of $29.255 billion.
Lakehouse Capital made the following comment about CoStar Group, Inc. (NASDAQ:CSGP) in its February 2023 investor letter:
“CoStar Group, Inc. (NASDAQ:CSGP) delivered another solid result with revenue and EPS growing 14% and 9% year-on-year, respectively. Annualised net new sales bookings, which are an indicator of future revenue growth, were up an impressive 15% year-on-year to $77 million, which was their second-best quarter on record. The company’s core business, the CoStar Suite, continued to perform well with revenue up 16%, driven by multiple factors, including CoStar’s upsell program, high renewal rates and new product and information capabilities. It was also pleasing to see contract renewal rates hold firm at 91% during the quarter, implying a very healthy and consistent customer life of ten-plus years.
When it comes to the company’s largest online marketplaces, Apartments.com and LoopNet, core metrics were resilient and both platforms continue to cement their leadership positions. For Apartments.com, net new bookings increased 177% year-on-year and it’s now clear that the business has turned the corner with respect to last year’s high occupancy headwinds. US multifamily vacancy rates rose another 0.5% to 7.1%, which was the fifth consecutive quarterly increase. Management believes the market environment will only continue to improve over the next several quarters, which is in stark contrast to the broader economy, and reaffirmed that they expect Apartments.com will be able to return to the roughly 20% pre-pandemic annualised growth rate in 2023
Despite the strong fundamental results, the company’s share price languished after the report as investors reacted negatively to management’s announcement that they intend to increase their reinvestment towards the residential opportunity in 2023 from $200 million to $480 million. Whilst such a move will depress margins further in the near term, we don’t view it as a negative. We believe it is the right decision from a long-term perspective and take comfort in the fact that management has an exceptional track record of successfully acquiring, integrating and scaling numerous properties over the last 10 years. It’s also worth noting that CoStar will be investing heavily in its residential platform at a time when its competitors are reducing their expenditures, which bodes well for potential market share gains. Overall, business momentum is strong and we remain excited about CoStar’s future and believe that the company’s scale and market leadership will drive growth for many years to come.”
Speedcurve Performance Analytics
CoStar Group, Inc. (NASDAQ:CSGP) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 46 hedge fund portfolios held CoStar Group, Inc. (NASDAQ:CSGP) at the end of the fourth quarter which was 40 in the previous quarter.
We discussed CoStar Group, Inc. (NASDAQ:CSGP) in another article and shared the list of biggest real estate companies in USA. In addition, please check out our hedge fund investor letters Q1 2023 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
