Baron Asset Fund’s Comments on CoStar Group (CSGP)

Baron Funds, an investment management company, released its “Baron Asset Fund” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. U.S. stocks rose amid volatility caused by tariff policies and Middle East tensions. Early April risk-off sentiment was fueled by Trump’s “Liberation Day” tariffs, seen as more severe than expected. U.S. equities rose after April 8, driven by favorable trade news, strong earnings, dovish Fed signals, and AI momentum, reaching record highs by quarter’s end. During the second quarter, the fund was up 7.85% (Institutional Shares) compared to an 18.20% gain for the Russell Midcap Growth Index. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its second-quarter 2025 investor letter, Baron Asset Fund 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. The one-month return of CoStar Group, Inc. (NASDAQ:CSGP) was 15.92%, and its shares gained 26.46% of their value over the last 52 weeks. On July 31, 2025, CoStar Group, Inc. (NASDAQ:CSGP) stock closed at $95.19 per share with a market capitalization of $40.327 billion.

Baron Asset Fund stated the following regarding CoStar Group, Inc. (NASDAQ:CSGP) in its second quarter 2025 investor letter:

“Real estate information and marketing services platform CoStar Group, Inc. (NASDAQ:CSGP) was responsible for most of the relative losses in Real Estate. The company’s recent performance has been tempered by significant investment in its residential product, Homes.com, and mixed net new sales. We remain encouraged by growth in both traffic and brand awareness for the new product and are optimistic that momentum will build as the company expands its dedicated residential sales force, enhances its customer targeting, and potentially benefits from changes in Multiple Listing Service practices. Growth in CoStar’s non residential business also appears poised to accelerate as the sales team refocuses on core offerings—a trend we expect to continue as headcount increases by 20% or more this year. We believe the value of CoStar’s core non-residential business alone exceeds the current share price of the stock, suggesting that investors are ascribing little value to the long-term residential opportunity.”

Was Jim Cramer Right About CoStar Group, Inc. (CSGP)?

An elegant residential building set against the modern skyline.

CoStar Group, Inc. (NASDAQ:CSGP) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 51 hedge fund portfolios held CoStar Group, Inc. (NASDAQ:CSGP) at the end of the first quarter, which was 56 in the previous quarter. In the second quarter of 2025, CoStar Group, Inc. (NASDAQ:CSGP) reported revenue of $781 million, representing a strong 15% increase from Q2 2024. While we acknowledge the risk and potential of CoStar Group, Inc. (NASDAQ:CSGP) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CoStar Group, Inc. (NASDAQ:CSGP) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered CoStar Group, Inc. (NASDAQ:CSGP) and shared the list of stock predictions that Jim Cramer got right. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money.

Disclosure: None. This article is originally published at Insider Monkey.