Here’s Why Baron Opportunity Fund Sold CoStar Group (CSGP)

Soumya Eswaran Wed, August 12, 2026 at 10:45 AM EDT 3 min read ** Baron Capital**, an investment management company, released its Q2 2026 investor letter for the "Baron Opportunity Fund". A copy of the letter is available to download here. During the second quarter, the Baron Opportunity Fund increased 27.07% (Institutional Shares), outperforming both the Russell 3000 Growth Index (17.05%) and the S&P 500 Index (15.20%). For the first half of 2026, the Fund rose by 15.79% against the Benchmark's 5.88% and the S&P 500's 10.21%. The rally was primarily driven by AI-related growth, despite uncertainty from geopolitical conflicts and inflation. A select group of stocks, notably in Information Technology, led market gains, with the Magnificent Seven contributing significantly to earnings. Growth stocks rebounded, surpassing value stocks, yet still lagged year-to-date. The Fund emphasizes disruptive secular trends like AI and expects long-term growth despite short-term market volatility. The demand for AI compute has dramatically increased, fueled by agentic AI applications. Companies reported measurable economic benefits from AI adoption, reinforcing the Fund's strategy focused on sustainable, innovative growth. Please review the Strategy's top five holdings to gain insights into their key selections for 2026.

In its Q2 2026 investor letter, Baron Opportunity Fund highlighted CoStar Group, Inc. (NASDAQ:CSGP). CoStar Group, Inc. (NASDAQ:CSGP), an information, analytics, and online marketplace services provider for commercial and residential property markets, was sold from the portfolio during the quarter. On August 11, 2026, CoStar Group, Inc. (NASDAQ:CSGP) closed at $31.12 per share, reflecting a market capitalization of $12.61 billion. CoStar Group, Inc. (NASDAQ:CSGP) posted a one-month return of 6.86%, while its shares lost 65.23% over the past 52 weeks.

Baron Opportunity Fund stated the following regarding CoStar Group, Inc. (NASDAQ:CSGP) in its Q2 2026 investor letter:

** "We elected to exit our position in real estate information and marketing services provider CoStar Group, Inc.** (NASDAQ:CSGP) after a successful multi-decade investment. Performance has been challenged over the past several years as the company has invested aggressively to build out its Homes.com residential real estate marketing platform. Revenue traction for Homes.com has been slow to materialize, and we are concerned that recent shifts in market structure will make it incrementally more difficult for CoStar to grow a residential business commensurate with its level of investment. Shares have also been pressured by the sector-wide AI disruption concerns weighing on the broader software and information services ecosystem."

** Story Continues Was Jim Cramer Right About CoStar Group, Inc. (CSGP)? CoStar Group, Inc. (NASDAQ:CSGP) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 62 hedge fund portfolios held CoStar Group, Inc. (NASDAQ:CSGP) at the end of the first quarter, up from 58 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 thebest short-term AI stock**.

In another article, we covered CoStar Group, Inc. (NASDAQ:CSGP) and shared Spyglass Growth Strategy's insight on the company. In addition, please check out our hedge fund investor letters Q2 2026 page for more investor letters from hedge funds and other leading investors.