Here's Why CoStar Group (CSGP) Traded Lower in 2025

Investment management company Vulcan Value Partners recently released its fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. All the strategies of Vulcan Value Partners delivered positive results in the year. The Large Cap Composite (Net) returned -1.5% in Q4 and 7.9% YTD, the Small Cap Composite (Net) gained 3.2% in Q4 and 9.5% YTD, The Focus Composite (Net) retuned 0.1% in Q4 and 7.1% YTD, Focus Plus Composite (Net) returned 0.1% in Q4 and 6.2% YTD and the All-Cap Composite (Net) returned 1.3% in Q4 and 10.7% YTD. Despite overvalued markets, the firm improved its price-to-value ratios while still achieving positive returns, prioritizing safety and long-term gains over short-term performance. This situation echoes the late 1990s dot-com bubble, where hype and high valuations led to a crash, and today’s AI disruptions seem to mirror that pattern, with investors risking overpaying for promising businesses. The firm is addressing such situations by sticking to its investment discipline. For more information on the firm’s best picks in 2025, please check its top five holdings. In addition, please check the firm’s top five holdings to know its best picks in 2025.

In its fourth-quarter 2025 investor letter, Vulcan Value Partners highlighted CoStar Group, Inc. (NASDAQ:CSGP) as a notable detractor within its Focus Plus Strategy. CoStar Group, Inc. (NASDAQ:CSGP) is an information, analytics, and online marketplace services provider for commercial and residential property markets. CoStar Group, Inc. (NASDAQ:CSGP) shares traded between $57.01 and $97.43 over the past 52 weeks. On January 26, 2026, CoStar Group, Inc. (NASDAQ:CSGP) stock closed at $65.81 per share. One-month return of CoStar Group, Inc. (NASDAQ:CSGP) was -3.02%, and its shares lost 15.88% of their value over the last three months. CoStar Group, Inc. (NASDAQ:CSGP) has a market capitalization of $27.89 billion.

Vulcan Value Partners stated the following regarding CoStar Group, Inc. (NASDAQ:CSGP) in its fourth quarter 2025 investor letter:

"CoStar Group, Inc. (NASDAQ:CSGP) is a premier information services provider to the commercial and residential real estate industries. It sells access to mission critical data and information assets, supported by a largely recurring, subscription-based revenue model. For the last few years, we have watched the core businesses under the CoStar umbrella enjoy solid double-digit revenue growth along with consistent margin expansion, all in line with our expectations. That said, at the enterprise level, margins have contracted significantly due to the company’s large and persistent investment in Homes.com. We will always support and even encourage our companies to reinvest over and above what is required into their business to both extend the duration of their growth and to defend their moats. However, the moat within CoStar has always resided in its commercial products, not in its residential endeavors. Therefore, we have viewed any success from Homes.com as pure optionality for some time and have attributed no value to this asset. The results of the company’s residential efforts have fallen dramatically short of its long-term expectations provided years ago. Despite its limited success to date, the company has provided medium term targets indicating that its non-core, residential efforts will continue to be loss making for many years to come. We are in the process of evaluating this new information."

CoStar Group, Inc. (NASDAQ:CSGP) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 57 hedge fund portfolios held CoStar Group, Inc. (NASDAQ:CSGP) at the end of the third quarter, compared to 59 in the previous quarter. CoStar Group, Inc.'s (NASDAQ:CSGP) revenue reached $834 million in Q3 2025, marking a 20% year-over-year increase. While we acknowledge the potential of CoStar Group, Inc. (NASDAQ:CSGP) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered CoStar Group, Inc. (NASDAQ:CSGP) and shared the list of most promising growth stocks according to analysts. In addition, please check out our hedge fund investor letters Q4 2025 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.