Mairs & Power, an investment advisor, released the fourth-quarter 2025 investor letter for the “Mairs & Power Growth Fund.” A copy of the letter is available for download here. In 2025, artificial intelligence (AI) and market concentration dominated the market. Increased investment in technology and AI infrastructure drove rising valuations and corporate spending, leading to bubble-like tendencies. However, easing inflation, a Federal Reserve rate cut in Q4, and resilient corporate earnings provided some optimism. In this environment, the fund underperformed both the S&P 500 Total Return (TR) and its peer group, the Morningstar Large Blend index, with a 10.54% gain compared to 17.88% and 15.55%, respectively, for the indexes. In 2025, stock selection proved challenging, though it has traditionally yielded favorable long-term results for shareholders. In addition, please check the Fund’s top five holdings to know its best picks in 2025.
In its fourth-quarter 2025 investor letter, Mairs & Power Growth Fund 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 April 2, 2026, Zoetis Inc. (NYSE:ZTS) closed at $117.94 per share. One-month return of Zoetis Inc. (NYSE:ZTS) was -2.87%, and its shares lost 22.27% over the past 52 weeks. Zoetis Inc. (NYSE:ZTS) has a market capitalization of $51.98 billion.
Mairs & Power Growth Fund stated the following regarding Zoetis Inc. (NYSE:ZTS) in its fourth quarter 2025 investor letter:
“Still, we believe the investments being made in AI today are laying a foundation that could drive outsized economic returns for companies able to harness the technology to accelerate innovation, increase sales, and improve profitability. During the fourth quarter, we added two such companies to the portfolio: Zoetis Inc. (NYSE:ZTS) and Intuitive Surgical.
Zoetis (ZTS) develops, manufactures, and commercializes pharmaceuticals serving both the companion animal and livestock markets. With a portfolio of more than 300 products, the company benefits from scale, enabling sustained investment in R&D, sales, and manufacturing capabilities. Zoetis is at the forefront of integrating generative AI into its R&D processes, with the goal of accelerating drug discovery and shortening development timelines. The animal health market has limited exposure to concentrated buyers, third-party payers, and generic competition, resulting in attractive industry economics. Over the past several decades, we have also observed a steady trend toward the “humanization” of pets, and younger generations appear poised to continue this shift. Zoetis’s shares have declined sharply over the past year due to heightened competitive pressures and a high-profile product launch setback, allowing us to start a position at what we believe was an attractive valuation. The company continues to invest aggressively in R&D to address critical unmet needs, including cardiovascular, oncology, and renal treatments, reinforcing our confidence in its long-term growth potential.”
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 Bristol Gate Capital Partners’ views on the company. Diamond Hill Capital, an investment management company, initiated a position in Zoetis Inc. (NYSE:ZTS) during Q4 2025 due to its broad portfolio and strong pipeline. 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.
