CoStar Group shareholder D. E. Shaw Group releases letter to Board

CoStar Group (CSGP) shareholder D. E. Shaw group, a global investment and technology development firm with more than $8B in investment capital, sent an open letter to the Board of Directors expressing “disappointment” in the company’s decision to reconfigure its reporting segments and, as a result, “reduce transparency” into the financial results of CoStar’s underlying businesses. Highlights of the letter include: “Last month, CoStar announced a sudden change in reporting structure that provides investors with less visibility into its underlying operating business and, in our view, represents a troubling step backward for transparency and accountability…This new reporting approach effectively buries the poor financial results of Homes.com within a new, amalgamated “Residential” segment that incorporates the larger and more profitable Apartments.com business-which we believe is performing well and has strong potential to deliver accelerating growth-and three other businesses… The company’s abrupt move to reduce segment transparency has raised a more fundamental question: whether shareholders can trust management’s reporting and stewardship. When disclosure is curtailed at a moment when accountability is most needed, investors cannot help but ask: What is CoStar trying to hide?…CoStar’s stock is now hovering near seven-year lows. This extraordinary record of value destruction, coupled with the deliberate reduction in transparency, underscores the urgent need for improved oversight and accountability to maximize shareholder value.”