Big investors keep bailing on Compass stock

More institutional investors dumped shares in Compass last quarter as the brokerage’s losses continued to pile up. 

Robert Citrone’s Discovery Capital Management and Montreal-based Wishbone Management were among the firms that sold large amounts of Compass stock in the fourth quarter, liquidating 25 and 30 percent of their holdings, respectively, filings with the Securities and Exchange Commission show.

Institutional Venture Partners, a longstanding Silicon Valley private equity investor, sold nearly 13 percent of its Compass holdings last quarter, according to data analytics firm Simply Wall St.

As a downturn in the housing market continues to eat into its revenues, Compass reported last week that it lost $158 million in the fourth quarter, despite layoffs and restrictions on company stock awards that it said caused exaggerated losses in previous regulatory filings. 

Discovery, an early investor that bought some of its Compass shares for as high as $118 prior to the brokerage’s initial public offering in April 2021, has since slashed its stake from nearly 10 percent of the company to less than one percent.

Compass CEO Robert Reffkin is now its third largest shareholder, behind Softbank, which bankrolled the company and owns 30 percent of its stock, and Vanguard. 

Discovery’s Citrone, once a cheerleader for Compass, has seen the value of his firm’s investment in the company fall from $240 million to about $12 million. The decline is a result of both the brokerage’s slumping share price and Citrone’s decision to sell large portions of his company’s Compass stock.

Compass’ share price closed below $3.00 amid a broader market downturn on Thursday, its lowest price since early January. It closed its first day of trading in April 2021 above $20 a share  and stood at $6.88 a year ago.

Asset manager Antipodes Partners was the biggest buyer of Compass stock last quarter, boosting its holdings by 39 percent to more than 20 million shares.

News that interest rates could rise more dramatically than previously predicted has rattled equity markets, and residential brokerages are especially vulnerable to rate hikes. Mortgage rates usually rise along with interest rates, making home buying more expensive.

Compass had long pitched investors a narrative that it was the first real estate brokerage to leverage technology in a way that could defy the maxim that “real estate is local.” But the company’s $900 million investment in its technology platform has not yet allowed it to become profitable.