Third Point confirms plans to nomiate directors to board of CoStar Group

Third Point sent a letter to the board of directors of CoStar Group (CSGP), in which the alternative asset manager stated in part: “Last year, we approached CoStar management and expressed our concerns about the weak board oversight, misalignment of management incentives, and disastrous capital allocation policies that allowed CEO Andy Florance to sink billions of shareholder dollars into an ill-conceived and hopelessly executed strategy to build an online classifieds business in the residential real estate (RRE) industry. Our dim view of the Company’s strategy is plainly shared by other shareholders, underscored by the abysmal stock performance of the past five years – down 27% versus a 94% total return for the S&P 500. We thought then, as we do now, that the Company’s anemic performance can be ascribed entirely to the misallocation of billions of dollars into Homes.com, overseen by a feckless board of directors that has failed to protect shareholders from Mr. Florance’s quixotic quest while rewarding him with exorbitant pay packages… The time for talking is over. Our standstill period expired at midnight, and we will now take concrete actions to protect our investment and ensure that the Company is governed and managed in a manner that will create long-term, sustainable value for all shareholders. Since most board members appear incapable of imposing discipline on Mr. Florance’s empire-building gambit, we intend to introduce shareholders to a slate of highly experienced new directors to be voted onto the board to reverse the downward spiral that has become synonymous with this CEO and his supine enablers. Despite years of governance failures, we remain confident in the value of CoStar’s world-class core commercial real estate business franchise… CoStar stands at a critical inflection point. Years of strategic blunders, uncontrolled spending, and board inaction have eroded shareholder trust. Immediate, decisive action is required to halt further value destruction and rebuild investor confidence. We look forward to engaging with our fellow long-term shareholders to save CoStar.”