Pelican Bay Capital Management Bets on Zoetis (ZTS) to Capitalize on Expanding Pet Care Market

Pelican Bay Capital Management (PBCM), an investment management company, released its fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. PBCM Concentrated Value Strategy returned 8.5% in the quarter, compared to a 3.8% return for the Russell 1000 Value Index. The robust performance of AI-related stocks and commodities exposure drove the Strategy’s performance in the quarter. For the full year, the Strategy returned 20.6% compared to 15.9% for the Index. The firm seeks to invest in high-quality companies with a strong balance sheet. Please review the Fund’s top five holdings to gain insights into their key selections for 2025.

In its fourth-quarter 2025 investor letter, PBCM highlighted Zoetis Inc. (NYSE:ZTS) as a new addition. Zoetis Inc. (NYSE:ZTS) is an animal health company focused on animal health medications, vaccines, and diagnostic products. On February 4, 2026, Zoetis Inc. (NYSE:ZTS) stock closed at $126.73 per share. Zoetis Inc. (NYSE:ZTS) delivered a -0.35% return in the past month, and its shares are down 26.07% over the past twelve months. Zoetis Inc. (NYSE:ZTS) has a market capitalization of about $56.165 billion.

PBCM stated the following regarding Zoetis Inc. (NYSE:ZTS) in its fourth quarter 2025 investor letter:

"We initiated new positions in three great companies including AECOM (ACM), FactSet Research (FDS), and Zoetis Inc. (NYSE:ZTS). Zoetis is the leading Pharmaceutical and Vaccine Developer in the Animal Health market. The global animal health market was approximately $50 billion last year and is anticipated to growth 5-6% per year for the next decade fueled by secular tailwinds in companion animal growth. This growth is driven by pets living longer and an increasing acceptance of medicines and vaccines by pet owners.

Zoetis has a multi-decade history of delivering a steady stream of new pharmaceuticals through organic research and development and targeted acquisitions. Since their spin-out from Pfizer in 2013, ZTS has delivered organic revenue growth of 8% annually compared to the 5% industry average. ZTS currently has a deep pipeline of new drugs that are expected to receive approval over the next 5 years that should sustain their above industry growth levels. They are anticipating to launch at least one major blockbuster every year for the next four years, and there are 12 potential blockbuster products in that pipeline. ZTS defines a blockbuster as a product that should do at least $100 million in revenues per year..." (Click here to read the full text)

Zoetis Inc. (NYSE:ZTS) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 72 hedge fund portfolios held Zoetis Inc. (NYSE:ZTS) at the end of the third quarter, compared to 75 in the previous quarter. 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 Diamond Hill Large Cap Fund's views on the company. Fundsmith Equity Fund expressed its optimistic views on Zoetis Inc. (NYSE:ZTS) in the Q4 2025 investor letter, highlighting its strong position in the veterinary pharmaceutical market. 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.