Zoetis (ZTS) Remains a Leader, So Why Was It Sold?

Zoetis (ZTS) Remains a Leader, So Why Was It Sold?

Fri, August 14, 2026 at 5:26 PM GMT+3 3 min read

• ZTS -1.65%

Polen Capital Management Llc released its "Polen Focus Growth Strategy" Q2 2026 investor letter. A copy of the letter can be downloaded here. Polen Focus Growth returned 6.33% (net of fees) in the second quarter of 2026, significantly underperforming the Russell 1000 Growth Index's 16.74% gain, as the market rally remained narrowly focused on AI infrastructure and semiconductor stocks. During the quarter, Polen Capital repositioned the portfolio toward companies benefiting from structural growth in AI infrastructure, power demand, and aerospace. Looking ahead, the managers remain confident in the long-term earnings potential of the portfolio but acknowledge that changing market dynamics and the rising opportunity cost of patience require a more nimble approach. They remain focused on competitively advantaged businesses with durable growth prospects, while selectively participating in AI infrastructure, commercial aerospace, and power infrastructure opportunities where supply constraints and long-term demand could support sustained earnings growth. In addition, please check the Fund's top five holdings to know its best picks in 2026.

In its second-quarter 2026 investor letter, Polen Focus Growth Strategy highlighted stocks like Zoetis Inc. (NYSE:ZTS). Zoetis Inc. (NYSE:ZTS) is a global animal health company that develops medicines, vaccines, and diagnostic products for livestock and companion animals. The one-month return of Zoetis Inc. (NYSE:ZTS) was -0.94% while its shares traded between $71.45 and $160.48 over the last 52 weeks. On August 13, 2026, Zoetis Inc. (NYSE:ZTS) stock closed at approximately $73.54 per share, with a market capitalization of about $31.34 billion.

Polen Focus Growth Strategy stated the following regarding Zoetis Inc. (NYSE:ZTS) in its Q2 2026 investor letter:

We sold Zoetis Inc. (NYSE:ZTS). Zoetis remains the global leader in animal health and retains many of the characteristics we admire: strong brands, scale, recurring demand, and a long runway for innovation. However, the business has slowed due in part to competitive entry in dermatology, an important growth area for the company. We expect Zoetis to return to better growth over time, supported by a pipeline of new product launches, but we think that acceleration is unlikely to restore revenue growth to high-single-digit levels until late next year. We will continue to follow the company closely and would consider reinvesting if the acceleration becomes more visible. For now, we believe the capital is better deployed into businesses that we think have stronger current momentum, including ATI, GE Aerospace, and GE Vernova.

Zoetis Inc. (NYSE:ZTS) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. As per our database, 57 hedge fund portfolios held Zoetis Inc. (NYSE:ZTS) at the end of the first quarter, which was 69 in the previous quarter. While we acknowledge the risk and potential of Zoetis Inc. (NYSE:ZTS) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. 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 thebest short-term AI stock.

In another article, we covered Zoetis Inc. (NYSE:ZTS) and shared Brown Advisory's views on the company. In addition, please check out our hedge fund investor letters Q1 2026 page for more investor letters from hedge funds and other leading investors.

READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years

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