Jensen Quality Growth Equity Decided to Sell Its Stake in Zoetis (ZTS)

Jensen Investment Management, an asset management company based in the US, released its fourth-quarter investor letter for “Jensen Quality Growth Equity Strategy”. A copy of the letter can be downloaded here. The S&P 500 Index continued its rally in Q4 2025, which started in 2022. The Jensen Quality Growth Equity Composite underperformed the Index in the fourth quarter. The Strategy returned -0.55% (net) in Q4 2025 Vs 2.66% for the Index. At the sector level, the portfolio’s relative underperformance was largely contributed to by the Industrials sector. The outperformance of low-quality stocks added to the relative underperformance from a quality perspective. Market concentration in mega-cap technology characterizes the current investment theme. The portfolio is well-positioned to capitalize on growth from AI and digital transformation, while maintaining its durability. The firm prioritizes holding companies that can generate economic value over multiple cycles, focusing on quality, cash generation, and durability for long-term shareholder returns. Please review the Portfolio’s top five holdings to gain insights into their key selections for 2025.

In its fourth-quarter 2025 investor letter, Jensen Quality Growth Equity Strategy highlighted stocks like Zoetis Inc. (NYSE:ZTS). Zoetis Inc. (NYSE:ZTS) is an animal health company focused on animal health medications, vaccines, and diagnostic products. On March 05, 2026, Zoetis Inc. (NYSE:ZTS) stock closed at $122.23 per share. Zoetis Inc. (NYSE:ZTS) delivered a -4.07% return in the past month, and its shares lost 28.26% over the past twelve months. Zoetis Inc. (NYSE:ZTS) has a market capitalization of about $53.866 billion.

Jensen Quality Growth Equity Strategy stated the following regarding Zoetis Inc. (NYSE:ZTS) in its fourth quarter 2025 investor letter:

"During the quarter, the Quality Growth Investment Team liquidated positions in Accenture (ACN), Amphenol (APH), and Zoetis Inc. (NYSE:ZTS) from the Portfolio.

Zoetis operates as a leader in the animal health market, with solid competitive advantages stemming from its entrenched position in a relatively stable industry. However, sales growth from established drugs has waned, and a once promising drug pipeline has underwhelmed. This setback led to a deterioration in our long-term growth outlook for the business, particularly surrounding growth prospects for its monoclonal antibody drug franchise.

The Jensen Quality Growth Investment Team has trimmed back our Zoetis position opportunistically throughout 2025 in favor of companies with accelerating growth prospects and improving competitive advantages, recently using proceeds to increase the Strategy’s position in Eli Lilly. We sold the remaining position and allocated the proceeds in favor of companies with more attractive risk adjusted return prospects."

Zoetis Inc. (NYSE:ZTS) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 69 hedge fund portfolios held Zoetis Inc. (NYSE:ZTS) at the end of the fourth quarter, up from 72 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 a list of best pet stocks to buy according to hedge funds. 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.