Zoetis (ZTS) Traded Lower Due to Reduced 2026 Outlook

Core Viewpoint - Diamond Hill Capital's "Large Cap Fund" investor letter for Q4 2025 highlights a cautious stance on AI-driven market enthusiasm while emphasizing the attractiveness of fundamentally stable, high-quality, cash-generative businesses [1] Group 1: Market Performance - The Russell 1000 Value Index increased by 3.8% in Q4 2025, with the information technology sector rising by 11% and communication services by 9%, driven by AI optimism [1] - The Fund returned 1.41% in Q4, underperforming the Russell 1000 Value Index [1] Group 2: Zoetis Inc. Performance - Zoetis Inc. (NYSE:ZTS) is identified as a leading relative detractor for the Fund, with its stock closing at $124.94 on February 2, 2026, and a 27.46% decline over the past twelve months [2][3] - The company reduced its 2026 outlook due to fewer veterinary visits by pet owners, leading to underperformance in Q4 [3] Group 3: Investment Sentiment - Despite acknowledging Zoetis Inc.'s potential, the company is not among the 30 most popular stocks among hedge funds, with a decrease in hedge fund portfolios holding the stock from 75 to 72 [4] - The Fund believes certain AI stocks present greater upside potential and less downside risk compared to Zoetis Inc. [4]