Diamond Hill Capital, an investment management company, released its “Large Cap Fund” fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. Equity markets continued their upward momentum in Q4, with the Russell 1000 Value Index increasing 3.8%. The information technology (+11%) and communication services (+9%) sectors are leading the rally, driven by AI optimism. The growth areas of the market accounted for the majority of the Index’s return in Q4. The firm maintains a cautious stance toward AI-driven market enthusiasm and believes that, fundamentally stable, high-quality, cash-generative businesses present attractive opportunities. Against this backdrop, the Fund returned 1.41% in the quarter, lagging the Russell 1000 Value Index’s 3.8% return. In addition, you can check the Fund’s top five holdings to see its best picks for 2025.
In its fourth-quarter 2025 investor letter, Diamond Hill Large Cap Fund highlighted Zoetis Inc. (NYSE:ZTS) as one of the leading relative detractors. Zoetis Inc. (NYSE:ZTS)) is an animal health company focused on the research, development, manufacturing, and sale of animal health medications, vaccines, and diagnostic products. On February 2, 2026, Zoetis Inc. (NYSE:ZTS) stock closed at $124.94 per share. Zoetis Inc. (NYSE:ZTS) delivered a 3.41% return in the past month, and its shares are down 27.46% over the past twelve months. Zoetis Inc. (NYSE:ZTS) has a market capitalization of $55.06 billion.
Diamond Hill Large Cap Fund stated the following regarding Zoetis Inc. (NYSE:ZTS) in its fourth quarter 2025 investor letter:
“Pet and livestock pharmaceutical manufacturer Zoetis Inc. (NYSE:ZTS) underperformed in Q4 after reducing its 2026 outlook, citing fewer veterinary visits by pet owners. Long term, we remain positive on the business given its broad portfolio with multiple growth drivers and a strong pipeline to address several undertreated pet conditions.”
Zoetis Inc. (NYSE:ZTS) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 72 hedge fund portfolios held Zoetis Inc. (NYSE:ZTS) at the end of the third quarter, compared to 75 in the previous quarter. While we acknowledge the potential of Zoetis Inc. (NYSE:ZTS) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
