Company Performance - Pelican Bay Capital Management (PBCM) reported a return of 8.5% for its Concentrated Value Strategy in Q4 2025, outperforming the Russell 1000 Value Index, which returned 3.8% [1] - For the full year, the Strategy achieved a return of 20.6%, compared to 15.9% for the Index [1] - The strong performance was attributed to AI-related stocks and commodities exposure [1] Company Addition - PBCM highlighted Zoetis Inc. (NYSE:ZTS) as a new addition to its portfolio [2] - Zoetis Inc. focuses on animal health medications, vaccines, and diagnostic products, with a market capitalization of approximately $56.165 billion [2] - As of February 4, 2026, Zoetis Inc. stock closed at $126.73 per share, with a -0.35% return in the past month and a decline of 26.07% over the past twelve months [2] Industry Insights - The global animal health market was valued at approximately $50 billion last year and is expected to grow at a rate of 5-6% per year over the next decade [3] - Growth in the animal health market is driven by trends such as pets living longer and increasing acceptance of medicines and vaccines by pet owners [3] - PBCM initiated new positions in Zoetis Inc., along with AECOM (ACM) and FactSet Research (FDS), indicating a strategic focus on high-quality companies in the animal health sector [3]

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]

Core Insights - Diamond Hill Capital's "Select Fund" underperformed the Russell 3000 Index in Q3 2025, returning 4.98% compared to the index's 8% gain [1] - The fund initiated four new positions in Q3, including Zoetis Inc., indicating a belief in the long-term growth potential of certain companies despite market trends [3] Company Overview: Zoetis Inc. (NYSE: ZTS) - Zoetis Inc. specializes in animal health medications, vaccines, and diagnostic products, with a market capitalization of $63.792 billion as of October 29, 2025 [2] - The stock experienced a one-month return of -1.74% and a 52-week decline of 19.49% [2] - In Q2 2025, Zoetis reported $2.5 billion in revenue, reflecting a 4% growth on a reported basis and 8% on an organic operational basis [4] Investment Sentiment - Despite the overall market rally, the fund believes that Zoetis's stock price does not reflect its long-term growth outlook [3] - Zoetis is not among the top 30 most popular stocks among hedge funds, with 75 hedge fund portfolios holding its shares at the end of Q2 2025, a slight increase from 74 in the previous quarter [4] - The fund suggests that while Zoetis has investment potential, certain AI stocks may offer greater upside with less downside risk [4]