Aggressive Capital Deployment in Its Homes.com Platform Pressured CoStar Group (CSGP) in Q4

Conestoga Capital Advisors, an asset management company, released its fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. In Q4 2025, Conestoga Capital Advisors Mid Cap Strategy returned -5.75% net of fees compared to the Russell Midcap Growth Index’s -3.70% return. The underperformance was driven by negative stock selection in the Technology and Industrials sectors, while positive sector allocation effects partially eased underperformance. The Mid Cap Composite returned -4.73% net of fees for the full year 2025, trailing the benchmark return of 8.66%. Please review the Strategy’s top five holdings to gain insights into their key selections for 2025.

In its fourth-quarter 2025 investor letter, Conestoga Capital Advisors highlighted stocks such as CoStar Group, Inc. (NASDAQ:CSGP). CoStar Group, Inc. (NASDAQ:CSGP) is an information, analytics, and online marketplace services provider for commercial and residential property markets. On February 19, 2026, CoStar Group, Inc. (NASDAQ:CSGP) stock closed at $49.07 per share. One-month return of CoStar Group, Inc. (NASDAQ:CSGP) was -25.20%, and its shares lost 36.10% of their value over the last three months. CoStar Group, Inc. (NASDAQ:CSGP) has a market capitalization of $20.797 billion.

Conestoga Capital Advisors stated the following regarding CoStar Group, Inc. (NASDAQ:CSGP) in its fourth quarter 2025 investor letter:

“CoStar Group, Inc. (NASDAQ:CSGP), the leading provider of commercial and residential real estate data and marketplace platforms, experienced share price pressure in the fourth quarter. The primary headwind was the company’s aggressive investment in its Homes.com platform, as elevated spending materially weighed on overall profitability. In addition, Apartment.com bookings fell short of investor expectations. While CSGP’s expansion into the residential real estate market represents a meaningful long-term growth opportunity, the substantial marketing investment required to gain market share pressured near-term margins. Further weighing on sentiment, media reports late in the quarter suggested that Google may enter the for-sale home listings market, raising concerns about increased competition and contributing to valuation pressure.”

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. 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.