Baron Asset Fund on CoStar Group
Thesis
CoStar's shares fell as fears about AI disruption caused significant multiple compression despite little evidence of a fundamental impact on the business. Baron continues to own CoStar because of its attractive business model, differentiated real estate data assets and opportunities to expand its information, analytics and marketplace offerings. The company also holds substantial cash, which Baron hopes will be used to repurchase shares aggressively at depressed valuations. The thesis is that the market has overreacted to AI disruption fears while CoStar's data advantages and growth opportunities remain intact.
“We continue to own CoStar due to its enviable business model, differentiated data assets, and meaningful growth opportunities”
Key risks
- AI could disrupt information and marketing services and weaken CoStar's competitive position