Polen Capital, an investment management company, released its “Polen Focus Growth Strategy” fourth quarter 2024 investor letter. A copy of the letter can be downloaded here. The U.S. equities have experienced a significant performance surge over the past two years. In the fourth quarter, the strategy returned 4.9% (gross) and 4.65% (net) compared to 7.07% for the Russell 1000 Growth Index and 2.41% for the S&P 500 Index. In addition, please check the fund’s top five holdings to know its best picks in 2024.
In its fourth quarter 2024 investor letter, Polen Focus Growth Strategy emphasized stocks such as CoStar Group, Inc. (NASDAQ:CSGP). CoStar Group, Inc. (NASDAQ:CSGP) is an information, analytics, and online marketplace services provider for commercial and residential property markets. The one-month return of CoStar Group, Inc. (NASDAQ:CSGP) was -0.49%, and its shares lost 8.83% of their value over the last 52 weeks. On March 5, 2025, CoStar Group, Inc. (NASDAQ:CSGP) stock closed at $77.81 per share with a market capitalization of $32.817 billion.
Polen Focus Growth Strategy stated the following regarding CoStar Group, Inc. (NASDAQ:CSGP) in its Q4 2024 investor letter:
“We initiated a position in CoStar Group, Inc. (NASDAQ:CSGP) after a significant pullback post-3Q24 earnings. CoStar Group is a leading provider of commercial real estate information, analytics, and online marketplaces, empowering clients with comprehensive data and technology solutions to make informed business decisions. The vast majority of the company’s revenue and profits come from its monopoly-like CoStar Suite (the go-to information source for the U.S. commercial real estate market) and Apartments.com, an advantaged player in the duopolistic U.S. apartment rental market. There are very high barriers to entry and network effects in these businesses, and both are double-digit growers with over 40% profit margins and very high levels of recurring revenue. We believe the price at which we acquired CoStar reflects the value of these two core businesses, leaving significant upside potential from numerous other growth drivers in earlier stages of development. In particular, Homes.com—CoStar’s residential real estate marketplace—is a source of heavy investment that is materially depressing the company’s overall profit margins in the near term. However, leading indicators of success are already emerging, and we expect Homes.com to contribute meaningfully to future growth and at high margins. If, for some reason, they don’t succeed, we would expect the investment to be curtailed, and the core profitability to shine through again. CoStar has a cash-rich balance sheet, high recurring revenue, and the ability to compound revenue and earnings for many years to come.”
An elegant residential building set against the modern skyline.
CoStar Group, Inc. (NASDAQ:CSGP) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 56 hedge fund portfolios held CoStar Group, Inc. (NASDAQ:CSGP) at the end of the fourth quarter which was 43 in the previous quarter. For the full year of 2024, CoStar Group, Inc. (NASDAQ:CSGP) reported revenue of $2.74 billion, reflecting an 11% increase from 2023. In the fourth quarter of 2024, revenue reached $709 million, also showing an 11% increase compared to the Q4 2023. While we acknowledge the potential of CoStar Group, Inc. (NASDAQ:CSGP) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed CoStar Group, Inc. (NASDAQ:CSGP) and shared Artisan Mid Cap Fund’s views on the company. In addition, please check out our hedge fund investor letters Q4 2024 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.