Diamond Hill Capital, a First Eagle Investment Management company, issued its Q2 2026 investor letter for its “Large Cap Strategy”. A copy of the letter is available to download here. The Strategy returned 3.42% net of fees, trailing the Russell 1000 Value Index’s 13.87% gain. Performance benefited from stock selection in consumer staples, materials and consumer discretionary, along with an underweight in utilities. However, stock selection in information technology, health care and industrials detracted from relative performance. AI remained the dominant market theme, driving an 81% gain in technology, while energy declined after the Iran war ended and oil prices fell. The Strategy’s limited exposure to companies benefiting from AI-related capital spending caused most of its underperformance, while software holdings remained pressured by concerns about AI disruption. Despite elevated market valuations, the team continues to find attractive opportunities through bottom-up research and expects active management to support better-than-market returns. In addition, please check the Strategy’s top five holdings to know its best picks in 2026.
In its second-quarter 2026 investor letter, Diamond Hill Capital Large Cap Strategy highlighted Zoetis Inc. (NYSE:ZTS). Zoetis Inc. (NYSE:ZTS), an animal health company focused on animal health medications, vaccines, and diagnostic products, detracted from the Fund’s performance during the quarter. On July 31, 2026, Zoetis Inc. (NYSE:ZTS) closed at $77.29 per share. One-month return of Zoetis Inc. (NYSE:ZTS) was 6.98%, and its shares lost 47.91% over the past 52 weeks. Zoetis Inc. (NYSE:ZTS) has a market capitalization of about $32.40 billion.
Diamond Hill Capital Large Cap Strategy stated the following regarding Zoetis Inc. (NYSE:ZTS) in its Q2 2026 investor letter:
“Shares of Zoetis Inc. (NYSE:ZTS), an animal health company, underperformed after the company reported flat organic revenue growth and lowered full-year guidance amid softer US companion-animal demand, fewer veterinary visits and a more competitive market. These results heightened concerns that slowing growth in the legacy portfolio could create a near-term earnings gap before newer pipeline products contribute more meaningfully.”
Zoetis Inc. (NYSE:ZTS) is not on our list of the 40 Most Popular Stocks Among Hedge Funds. 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 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 Platinum International Brands Fund’s insight on the company. In its Q2 2026 investor letter, Moon Capital Management, LLCs highlighted Zoetis Inc. (NYSE:ZTS) as a high‑quality, market‑leading animal health company with durable growth potential. In addition, please check out our hedge fund investor letters Q2 2026 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.
