CoStar Group (CSGP)

Is -40% in Q1 and one of the worst performers on the S&P. Investors see AI as a threat to them.

One of the best businesses in the world, with high ROIC. Spent a bunch of $$ on competing with online realtors, with no profits yet. Activist wants it figured out by year's end or to move on; company will win either way (either the venture will take off, or the $$ will be redeployed elsewhere). Very attractive valuation.

Normally it would be good for a company to offer analytics in commercial real estate, but CRE is not doing well in the US. The company does make money but trades at a high multiple.

One of the world's best businesses. Provides data to financial and real estate companies, and that part's doing phenomenally. Also owns online real estate platforms, very competitive space, impacting its balance sheet. Spending lots of $$ to try to disrupt competitors, tough slog, depressing free cashflow and margins. CEO says not to worry, and there's no reason not to believe him, as they've pursued this strategy before.

Likes it very much for the long term.

CSGP has struggled year-to-date down 12%, however we view the recent move to acquire MTTR positively. The balance sheet is in good shape with $3.85B in net cash. Revenue growth is expected to be strong and EPS is expected to double in 2025. The valuation is expensive on a forward earnings basis at 99x, and is above three year averages. On a forward sales basis, the valuation is at a low point on a three-year basis but is still expensive at 10.8x. We think it is a decent company and there is future potential as commercial real estate activity picks up. The valuation is expensive and recent declining profitability are deterrents. 
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Sells real estate data to anyone who needs it. Subscription-based, proprietary. Market leader. Just made a smart acquisition. Raised guidance. Stock's fallen a lot this year and he has no idea why. Thinks next year will generate ample free cashflow. No dividend.

He started buying it in 2021 when shares fell. Only lately has this perked up. The own info about real estate deals globally, and they run platforms like apartments.com and the new Homes.com, launching at the right time now and is already the #2 realtor site. Lots of cash flow. The stock looks expensive, but the CEO is focussed on growth. Fine potential here.

It sells subscription data on real estate to high net worth investors, banks, etc. They have a number of platforms but it hasn't performed very well lately because of concern for its bidding on a new platform. Has a great subscription base and is capital light. Not cheap but good long term.