Aristotle Atlantic's Core Equity Strategy Sold Zoetis (ZTS) Due to Competition Concerns

Aristotle Atlantic Partners, LLC, an investment advisor, released its “Core Equity Strategy” second quarter 2025 investor letter. A copy of the letter can be downloaded here. The S&P 500 Index rose 10.94% in the second quarter of 2025, marking a rebound of the U.S. equities market. Aristotle Atlantic’s Core Equity strategy returned 14.43% gross of fees (14.30% net of fees) in the quarter, outperforming the S&P 500 Index’s 10.94% total return. The relative outperformance was due to security selection. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.

In its second quarter 2025 investor letter, Aristotle Atlantic Core Equity Strategy highlighted stocks such as Zoetis Inc. (NYSE:ZTS). Zoetis Inc. (NYSE: ZTS) is involved in the research, development, manufacturing, and sale of animal health medications, vaccines, and diagnostic products and services. The one-month return of Zoetis Inc. (NYSE:ZTS) was -3.84%, and its shares lost 15.85% of their value over the last 52 weeks. On July 22, 2025, Zoetis Inc. (NYSE:ZTS) stock closed at $151.19 per share, with a market capitalization of $67.311 billion.

Aristotle Atlantic Core Equity Strategy stated the following regarding Zoetis Inc. (NYSE:ZTS) in its second quarter 2025 investor letter:

"We sold Zoetis Inc. (NYSE:ZTS), as concerns continue to grow about competitive entrants in the dermatology and parasiticides animal health marketplace. While the company has continued to execute well in the face of new entrants, we believe that this will continue to be an overhang on the stock in the near to medium term. Given the premium valuation versus other areas in health care, we believe there is more upside elsewhere and are exiting our position in the stock."

Zoetis Inc. (NYSE:ZTS) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 74 hedge fund portfolios held Zoetis Inc. (NYSE:ZTS) at the end of the first quarter, compared to 76 in the previous quarter. In the first quarter of 2025, Zoetis Inc. (NYSE:ZTS) posted $2.2 billion in revenue, growing 1% on a reported basis and 9% on an organic operational basis. While we acknowledge the potential of Zoetis Inc. (NYSE:ZTS) 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.

In another article, we covered Zoetis Inc. (NYSE:ZTS) and shared Wedgewood Partners' views on the company. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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