Fundsmith Equity Fund's Thoughts on Novo Nordisk (NVO)

Fundsmith, an investment management firm based in London, has released its annual 2025 investor letter for its “Fundsmith Equity Fund.” A copy of the letter can be downloaded here. The fund focuses on investing in equities globally. The T Class Accumulation shares where the firm invested returned 0.8% in 2025, compared to 12.8% for the MSCI World Index (‘Index’) in sterling with dividends reinvested. Since its inception, the fund has returned 1.7% p.a. more than the index. The fund attributed its underperformance during 2025 to index concentration, the growth of assets in Index Funds, and weakness in the dollar. In addition, please check the fund’s top five holdings to know its best picks in 2025.

 In its fourth-quarter 2025 investor letter, Fundsmith Equity Fund highlighted stocks such as Novo Nordisk A/S (NYSE:NVO). Novo Nordisk A/S (NYSE:NVO) engages in the research and development, manufacture, and distribution of pharmaceutical products. The one-month return of Novo Nordisk A/S (NYSE:NVO) was 16.76%, and its shares lost 30.50% of their value over the last 52 weeks. On January 9, 2026, Novo Nordisk A/S (NYSE:NVO) stock closed at $58.81 per share, with a market capitalization of $263.8 billion.

Fundsmith Equity Fund stated the following regarding Novo Nordisk A/S (NYSE:NVO) in its fourth quarter 2025 investor letter:

"Novo Nordisk A/S (NYSE:NVO) managed to reaffirm my belief that you should never say ‘Things can’t get any worse’. The company has parlayed a market leading position in what is probably the most exciting drug development for about three decades into a secondary position and has failed to prevent illegal generic competition in its core US market.

One of our mantras has been that we should always invest in businesses which could be run by an idiot so that performance is not heavily reliant upon management. We have been made painfully aware that the range of businesses which can be run by an idiot is much more limited than we thought and hereafter we will aim to be more aware of the impact that poor management can have. Our experience also suggests that when we encounter poor management, engagement to change it is less effective than selling the shares. Meanwhile Novo Nordisk has appointed a new CEO and made wholesale board changes and the present rating (a PE of 13) appears to us to be expecting very little. If we did not already own it I suspect we would contemplate buying it as a good business which has been depressed by a ‘glitch’, albeit a rather large glitch."

Novo Nordisk A/S (NYSE:NVO) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 50 hedge fund portfolios held Novo Nordisk A/S (NYSE:NVO) at the end of the third quarter, which was 45 in the previous quarter. While we acknowledge the potential of Novo Nordisk A/S (NYSE:NVO) 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 Novo Nordisk A/S (NYSE:NVO) and shared SGA U.S. Large Cap Growth Strategy's views on the company. In addition, please check out our hedge fund investor letters Q4 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.