Bristol Gate Capital Partners, an investment management company, published its Q4 2025 investor letter for the “US Equity Strategy”. A copy of the letter can be downloaded here. Bristol Gate prioritizes companies with strong free cash flows, disciplined capital allocation, and high dividend growth for superior risk-adjusted returns. These resilient businesses align management interests with shareholders through sustainable dividends. Since late 2022, the market has shifted towards AI leaders, resulting in the fund’s underperformance due to narrow breadth. While the firm invests in data science and AI, the focus remains on high dividend growth companies. Recently, this narrow focus was shifting, supported by the outperformance of the S&P US Dividend Growers, S&P 500 Dividend Aristocrats, and S&P 500 Equal Weight. This market breadth expansion, along with the firm’s Data Science team’s advancements in the Distant Future Model, offers a strong opportunity for investors to buy the strategy and mitigate risks in the current concentrated market. Please review the Strategy’s top five holdings to gain insights into their key selections for 2025.
In its fourth-quarter 2025 investor letter, Bristol Gate Capital Partners US Equity Strategy highlighted Zoetis Inc. (NYSE:ZTS). Zoetis Inc. (NYSE:ZTS) is an animal health company focused on animal health medications, vaccines, and diagnostic products. On March 27, 2026, Zoetis Inc. (NYSE:ZTS) stock closed at $113.35 per share. Zoetis Inc. (NYSE:ZTS) delivered a -12.10% return in the past month, and its shares lost 31.16% over the past twelve months. Zoetis Inc. (NYSE:ZTS) has a market capitalization of about $49.953 billion.
Bristol Gate Capital Partners US Equity Strategy stated the following regarding Zoetis Inc. (NYSE:ZTS) in its fourth quarter 2025 investor letter:
“Materials and Consumer Discretionary were the only negative absolute sectors in Q4. Zoetis Inc. (NYSE:ZTS), Carrier Global and Cintas were the main detractors from a stock perspective. Zoetis (ZTS) released earnings earlier in November and while earnings per share was ahead of consensus, sales trailed modestly. The company also lowered its annual guidance, leading to a significant stock decline after the release. Throughout the year, ZTS struggled with fewer US veterinarian visits, new competition in key markets and ongoing negative social media coverage related to the company’s osteoarthritis pain drugs. In December, the board of directors declared a dividend increase of 6% from the quarterly rate paid in 2025. We exited the position prior to year end because of deteriorating dividend growth. We held ZTS for over 6 years and until 2025, the company had an annualized dividend growth rate of 22% during our holding period.
Zoetis was sold because of deteriorating dividend growth. We held Zoetis for over 6 years and, until 2025, the company had an annualized dividend growth rate of 22% during our holding period. However, our model had recently predicted a slowdown in dividend growth and the company subsequently announced a dividend increase of only 6% for the coming year. Setbacks surrounding its key osteoarthritis drug, Librela, and intensified competition in its dermatology and parasiticide markets over the last year seemingly made maintaining its historical dividend growth rate more challenging.”
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, compared to 72 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 are looking for an AI stock that is more promising than Zoetis Inc. (NYSE:ZTS) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Zoetis Inc. (NYSE:ZTS) and shared Diamond Hill Mid 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.
