When it comes to Compass, the whales are buying the dip.
Several dozen institutional investors have taken up positions in the residential brokerage as of the end of the second quarter, according to an analysis of SEC data by Nasdaq.
Institutional investors collectively own $665 million of Compass’ Class A common stock, or about two-thirds of the outstanding shares, according to the analysis, which defined institutional investors as those managing north of $100 million. The disclosures, which were filed at the end of second quarter, show that 68 of them have taken new positions in Compass, while 109 have increased their holdings in the firm. Sixty-five investors reduced their holdings, while 38 exited their stakes entirely. Meanwhile, a total of 25 investors made no changes to their holdings.
The numbers indicate that at least among the biggest players, there’s a sense that there’s a bargain to be had. Compass went public in April 2021 with a stock price of $20. Its stock price as of June 30, when these disclosures were filed, was $3.6. At close of trading on Sept. 28, its stock was at $2.6.
The company’s largest shareholder is SoftBank, which co-led its $550 million Series E round in December 2017, which valued the brokerage at $2.2 billion, according to PitchBook. It also co-led Compass’ $400 million Series F round in December 2018 (at a $4.4 billion valuation) and its $500 million Series G round in November 2019 (at a $6.4 billion valuation). SoftBank disclosed on Aug. 5 that its losses on Compass at the time exceeded $500 million. According to the analysis, it owns nearly a third of Compass.
Two major money managers, BlackRock and Vanguard, have upped their stake in the brokerage. Vanguard, which recently acquired 13.8 million shares, now owns 7.4 percent of Compass. BlackRock, meanwhile, bought 11.2 million shares, increasing its stake in the company to three percent.
Utah-based Wasatch Advisors acquired the largest new position in the brokerage, paying $9.5 million for around 4 million shares, followed by Boston-based Geode Capital with a $6 million investment.
New positions from institutional investors, however, represent a smaller portion of shares compared to firms that cashed out. Institutions that closed their position in the stock collectively held 25.5 million shares, much higher than the 17.9 million shares from new investors. Venture capital firm Thrive, led by Joshua Kushner, reported the largest divestment, selling nearly 7.3 million shares.
Compass went public with a market cap of nearly $7 billion, compared to its current market cap of $1.1 billion. Its losses in the 18-month period since January 2021 total nearly $800 million, nearly $300 million of that this year. It downsized its full-year revenue estimates to between $6.15 billion and $6.45 billion, compared to earlier guidance of $7.6 billion and $8 billion. The company declined to comment.
The firm is now in deep cost-cutting mode, looking to shed over $300 million in expenses this year. It has done multiple rounds of layoffs and scaled back on programs like Compass Concierge, and also said it will take a harder line on agent commission splits.