Two names, one transaction each, both with the order published in advance. Research legend: QT Qualtrim · SA Seeking Alpha · STK Stock Analysis. Written post with no timestamps — the At link opens the article.
| Ticker | Name | Research | View | What he said | At |
|---|---|---|---|---|---|
| ZTS | Zoetis | QT · SA · STK · FA | Positive | BOUGHT — $54,000, 440 shares, limit $123, funded entirely by the OTC Markets sale. The setup is a five-year divergence between price and profit: "the stock price of Zoetis declined by 21.0%… over the same period, its EPS rose by +38.5%. As a result, the valuation of the stock heavily declined." Valuation: Forward PE 18.0x, Earnings Growth Model 15.8% ("you double your money in less than 5 years"), reverse DCF requiring 8.0% FCF growth for a 10% return. The cause of the fall is dated: "the trigger was the earnings report in November 2025. That turned out less positive than expected, causing the share price to drop by about 17 percent," with the weakness "primarily" in livestock — "those activities are also more dependent on the economic cycle" — while pet care is structural: "people have fewer and fewer children and more and more pets, and they are treated as full-fledged family members" (illustrated with an uninsured $25,000 vet bill). The business: #1 in animal health globally, 100+ countries, just under 70% of revenue from pets, products led by Apoquel & Cytopoint (dermatology), Simparica Trio (parasiticide) and Librela for dog arthritis, "expected to reach $2 billion in sales by 2028." Moat: "more than 5,000 patents", heavy R&D, plus regulatory and scale barriers. And the structural advantage over human pharma: "most customers pay out of pocket, so Zoetis doesn't have to deal with insurance companies putting pressure on prices." Buying back its own shares at this level. Verdict: "The market is handing us a quality compounder at bargain prices. We're taking it." | read ↗ |
| OTCM | OTC Markets Group | QT · SA · STK | Negative | SOLD — 1,000 shares at a $54 limit against a $55.5 price, a position worth $55,470. "Our investment in OTC Markets has been 'dead money' since we bought it in October 2023. The only return we received was the yearly dividend yield of 4.8%." Three stated reasons, none of them valuation: (1) "Growth has stalled and it looks like it's a more structural problem than initially thought." (2) "Financial data are becoming more and more a commodity product and OTC Markets seems to be struggling from increased competition." (3) "The high level of Stock-Based Compensation (23.4% of Net Income) is also something I don't like." Execution is handled explicitly because of the float: "the liquidity in OTC Markets is limited. Hopefully we don't influence the stock price… If we do, I won't be in a hurry to sell. I want to sell at the right price." Closing verdict: "growth has stalled, competition is increasing, and the business model looks structurally challenged." Rated Hold with every valuation test passing seven days earlier. | read ↗ |
Three things this page fixes in the record. (1) The portfolio roster changes here. The January book holds OTCM; the April book holds ZTS in its place — this is the transaction between them, and it keeps the count at 18. (2) The sell rule is applied as written. The archive's standing rule is never to sell on valuation, only when the investment case is no longer intact; all three reasons given here are about the business, and the stock is cheap on every model in the 22 January review. (3) The SBC objection recurs. 23.4% of net income here is almost exactly the 22% that keeps FICO out of the portfolio four months later — the same disqualifier, applied consistently. Zoetis' stance was already Positive in the 11 January reader list ("just short-term noise if you ask me"); this is where that view becomes a position.
A jargon-free summary of the thesis behind each argued name. (Renders on each name's consolidated page.)
Zoetis sells the medicines, vaccines and diagnostic tests that vets and farmers use on animals. It is the largest animal-health company in the world, operating in more than a hundred countries, with just under 70% of its revenue coming from pets and the rest from livestock.
The opportunity is a five-year divergence that is easy to check: the shares are 21% lower than they were five years ago, and the company's earnings per share are 38.5% higher. Nothing about the profits explains the price. What triggered the latest leg down is dated precisely — a disappointing set of results in November 2025 knocked about 17% off in one go.
Slegers' read is that the disappointment came from the wrong half of the business. The weakness was in farm animals, which rises and falls with the farming economy. The pet half, which is most of the company, runs on something slower and stronger: people are having fewer children and keeping more animals, and treating them as family. His illustration is a woman in America who paid $25,000 out of her own pocket for medication for a sick dog.
That last detail is also the structural point. In human healthcare an insurer sits between the company and the patient and pushes prices down. In animal health the owner pays directly, out of love, with nobody negotiating — so Zoetis keeps its pricing power. Add more than 5,000 patents, regulatory barriers to new entrants, and a drug for dog arthritis expected to reach $2 billion of sales by 2028.
The price makes it work: 18 times next year's earnings, a modelled return of about 15.8% a year — doubling your money in under five years — and, working backwards, cash flow only needs to grow 8% a year to deliver 10% annually to an owner. The company itself is buying back stock at this level. The purchase is $54,000, 440 shares, with a limit at $123.
OTC Markets runs the trading and data platform for American shares that are not listed on the New York Stock Exchange or Nasdaq, charging companies and brokers for listings, market data and compliance tools.
It has been owned since October 2023 and has gone nowhere. In twenty-seven months the only return was the 4.8% dividend — which Slegers calls, plainly, "dead money."
What makes this sale worth studying is that it is not made on the price. On every measure in the review a week earlier the shares were cheap: below their own five-year average multiple, clearing the return hurdle, and priced for less growth than expected. The reasons given are all about the business. Growth has stopped, and he now believes that is permanent rather than a soft patch. Financial data — the product — is becoming a commodity, which means competitors can offer the same thing and compete on price. And the company pays its staff in shares worth 23.4% of its profits, which is a large ongoing cost to existing owners.
A cheap price does not fix any of those. That is the difference between a bargain and a value trap, and this is the archive's clearest example of the distinction being acted on rather than described.
One practical detail worth copying: the stock barely trades, so rather than dumping 1,000 shares into a thin market, he sets a limit at $54 against a $55.5 price and says outright that if the selling moves the price he will simply wait. Announcing a sale in an illiquid stock to a large subscriber base is a genuine problem, and a limit order is the honest way to handle it.
Summary derived from the archived Compounding Quality post (text in transcript.txt) for personal study. Not investment advice. © Compounding Quality / Pieter Slegers for source material.