In short: Referenced only — held, no new view. The smallest weight (~1.8%). Sheet: EPS 6.41 → 7.91 + 2.7% = 9.96%/yr.
In short: BUY (portfolio) — and the fifth-worst performer in the universe YTD at −42.7%. ER 15.3%; fair value $109.7 vs $72.1 (34.2% under); fwd PE 16.2 vs 31.7 (48.9% under); RDCF −0.5% vs 7.0%. Like HGT, named among the owned Buys but missing from the Buy sheet image.
In short: The smallest position at ~1.8%, and named among the four whose "valuation… look the most attractive today" at 12x NTM P/E on a 12% EPS CAGR. 440 shares yielding $2,248.40; modelled three-year return 9.96% including a 2.7% dividend. −19% YTD and −40% over twelve months. Notably, a name called attractively valued and not named for an increase — the upweighting is explicitly about quality, not price.
In short: BUY (portfolio), and the year's fifth-worst performer at −42.9%. Fwd PE 16.2 against a 31.7 five-year average (48.9% under); ER 15.28%; the price implies −0.4% growth against 7.0% expected. Fair value $109.2 vs $71.84. Five-year CAGR −18.1%.
In short: BUY. Bought 3 Feb 2026; $75.5 against a $123.8 fair value — +64.0% — and the second-worst YTD performer at -40.7%, with a five-year CAGR of -16.5%. Forward PE 16.2 against a 31.7 five-year average (48.9% below). Expected return 15.2% on 7.0% EPS growth plus a 2.8% yield and a re-rating to 25x. Results due 6 August.
In short: Sethi sold it and calls it "a mistake" — "they kept on misstepping," so he closed out the position.
In short: STRONG BUY, Strong(+) conviction — and now the universe's seventh-worst performer at −40.7% YTD. FV $112.5 vs $74.7 = 33.6% under; ER 15.2%; fwd PE 16.2 against 31.7 (48.9% under); RDCF 4.1% vs 7.0%.
In short: STRONG BUY, Strong(+) conviction. FV $118.4 vs $79.4 = 32.9% under; ER 15.1%; fwd PE 16.2 against 31.7 (48.9% under); RDCF 5.7% vs 7.0%. Also the eighth-worst performer of the year at −37.0%, on a −19.8% five-year CAGR — a de-rating, not a collapse in earnings.
In short: Second-worst performer at -31.9%, from the published table, with no commentary here — because it is a portfolio holding and this list excludes them. The full bull case, at 10.6x earnings and a $180 fair value, was made in the 24 May portfolio update two weeks earlier.
In short: The issue's most quantified idea. "The stock of Zoetis dropped nearly 40% in the past month" on flat Q1 2026 revenue, with the US companion animal segment down 11% as pet owners turn price-sensitive and Elanco takes share on promotional pricing. The moat argument: ROIC above 20% "while Elanco is still loss making"; more than 1,700 researchers and $6bn spent on research, with 12 products in development aimed at animal cancer and kidney disease; and insider buying — "Frank D'Amelio recently bought over $500,000 worth of shares". The valuation is stated explicitly: "You can buy Zoetis for just 10.6x (!) earnings… If we assume a fair Forward PE of 20x and $9 in EPS by 2030, a fair stock price would be $180. This implies 142% (!) upside… a yearly expected return of over 25%." Described as "cheaper than it's ever been since its IPO", with the next product wave due in 2027.
Zoetis sells medicines, vaccines and diagnostic tests for pets and farm animals — to vets, farmers and distributors. The shares fell nearly 40% in a single month because revenue for the first quarter of 2026 was flat, and the American pet segment in particular shrank 11%.
The reasons for that are real but described as temporary: households are cutting back on discretionary spending for their pets, a competitor called Elanco is buying market share with heavy discounting, and Zoetis is in a gap between major product launches with the next wave due in 2027.
Three things suggest the underlying business is intact. It earns more than 20% on the capital invested in it, while Elanco — the company taking its share — loses money, which suggests the discounting cannot last. It employs over 1,700 researchers, has spent $6 billion on research, and has 12 potential products in development including treatments for cancer and kidney disease in animals. And a company director has just bought more than $500,000 of the shares with his own money.
The valuation is where the case becomes concrete. The shares cost 10.6 times earnings, the cheapest they have been since the company listed. If they eventually trade at a normal 20 times, and the company earns $9 per share by 2030, the shares would be worth $180 — 142% above today, or more than 25% a year.
In short: STRONG BUY, Strong+ conviction. EPS growth 7.0%, dividend 1.8%, FWD PE 16.2 against a fair exit 25.0, expected return 14.2%, fair value 156.6 against 114.2 = 27.1% undervalued.
In short: Listed Strong+ on the conviction slide; covered in Part I. No new view here.
In short: Strong+ conviction. Medicines, vaccines and diagnostics for livestock and pets. The demand thesis is social: "Loneliness is becoming a serious problem in our society… people are treating their pets as a full family member nowadays. Zoetis fully benefits from this." On price: "Zoetis is cheap. The company currently trades at a Forward PE of just 17.2x. This is the cheapest valuation level of the past 10 years (do you start noticing a trend here?)."
Zoetis sells the medicines, vaccines and diagnostic tests that vets and farmers use on animals — dogs and cats on one side, livestock on the other. It is the largest company in animal health.
The demand argument is social rather than scientific. More people live alone, and pets have moved from being animals to being family members, which means owners now authorise treatments and spend for a dog that would have been unthinkable a generation ago. That is a slow, durable trend rather than a product cycle, and Zoetis sits directly in front of it.
The reason it is written up now is that the shares trade at about 17 times forward earnings — the cheapest in a decade for a business whose demand is arguably more recession-resistant than human pharma, since the spending is emotional rather than discretionary.
In short: STRONG BUY. 16.8x forward against a 31.7x five-year average (47.0% under), expected return 13.5%, reverse-DCF margin +1.3pp on modest 7.0% expected growth. Bought for the portfolio two weeks earlier.
In short: Disclosed holding, category "Basic Human Needs & Desires": animal medicines, vaccines and diagnostics, because "people bond with pets and depend on livestock, both needs are ancient." Bought for the portfolio shortly before this issue (see 2026-MAR-05).
In short: The one house view in the issue. Appears twice — in the "Big Funds, Small Positions" list and among the eight superinvestor buys. "A company that stands out to us? Zoetis. We recently bought Zoetis for the Portfolio… We think the company is currently too cheap."
Zoetis makes medicines, vaccines and diagnostic tests for animals — both farm livestock and household pets. It is the largest company in that market. The demand behind it is unusually durable: people keep feeding themselves, and pet owners increasingly treat animals as family members and pay for their healthcare accordingly.
This issue mentions it twice — several of the tracked quality funds hold it in small size, and it was one of the eight names they added to last quarter — but the sentence that matters is Compounding Quality's own: they recently bought it for the portfolio and think it is "currently too cheap." That is the only outright house opinion in an article otherwise made of other people's filings.
In short: A Strong Buy, seventeen days after purchase. Bought on 29 January with the OTC Markets proceeds ($54,000, 440 shares, limit $123) and already in the top rating tier. It does not appear in the published weight chart, which shows only seventeen of the stated eighteen holdings.
In short: BUY, and fourteenth on the forward-PE screen. 18.0x forward against a 31.7x five-year average (43.2% under) for a 12.7% expected return and a $154.6 fair value against $124.65, with a +0.8pp reverse-DCF margin. Bought a week earlier on 29 January with the OTC Markets proceeds; a Strong Buy by 15 February.
In short: 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."
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.
In short: Best Buy #1. The world's largest animal-health company — "look at the medicines on the shelf… almost all of them? Made by Zoetis." Despite that dominance it "trades at its cheapest valuation level in 10 years." Reverse DCF needs 7.4% FCF growth to justify the price against a 10-yr FCF CAGR of 18.2% and 13.9% expected over three years. "Zoetis seems to be undervalued right now."
Zoetis makes the medicines and vaccines a vet uses — flea and tick treatments, pet vaccines, drugs for cattle and poultry. It is the largest company of its kind in the world, and its products are effectively the default on the shelf.
The reason it is the top pick this month is price rather than news: despite that dominance, the stock trades at its cheapest valuation in a decade. Slegers checks this with a reverse discounted-cash-flow — instead of forecasting the future, he works backwards from today's share price to ask what growth the market must be assuming. The answer is 7.4% a year in cash flow. Zoetis has actually grown cash flow 18% a year over the past decade, and analysts expect about 14% over the next three. When the price demands far less than the business has delivered, the odds tilt in the buyer's favour.
In short: #8 pick, and the one that becomes a purchase. "Zoetis expects the global animal health market to almost double in the next ten years. A company like Zoetis could fully benefit from this. However, the market is less optimistic. The reason? The company cut its revenue guidance. This disappointed a lot of investors. This is just short-term noise if you ask me. As a result, you can buy Zoetis at one of it's cheapest valuation levels ever." Table: 28.2% net margin, 24.2% ROIC, 19.0x forward, 7.8% expected growth. Bought on 29 January at a $123 limit.
Zoetis makes the medicines, vaccines and tests that vets and farmers use on animals — about two-thirds pets, one-third livestock. It is the biggest company in animal health.
The shares are cheap because the company told investors it would sell less than previously expected. Slegers' response is to separate the two time horizons: a guidance cut changes this year, and the argument for owning Zoetis is that the animal-health market roughly doubles over ten. His phrase — "this is just short-term noise if you ask me" — is the standard setup for a purchase in this archive, and eighteen days later it is exactly that: he sells OTC Markets and buys Zoetis with the proceeds.
The numbers in the closing table support the case rather than the enthusiasm: a 28.2% profit margin and a 24.2% return on capital, at 19 times next year's earnings. Good business, ordinary price, temporary problem — which is the entire method in one row.
In short: #10. The animal-health leader — veterinary medicines and vaccines for livestock and pets, with heavy R&D reinvestment. "More and more people do not have a partner or children and buy a pet instead. Together with IDEXX, Zoetis dominates the entire industry."
Zoetis is the largest animal-health company in the world — the medicines, vaccines and treatments a vet reaches for, both for pets and for farm animals. It spends heavily on research to keep launching new products, which is what keeps a drug business from being ground down by generics.
The durability argument is social: more people are living without a partner or children and buying a pet instead, and they spend more on that pet every year. Together with IDEXX (the diagnostics leader), Slegers says Zoetis "dominates the entire industry" — a duopoly-like position in a market with a demographic tailwind behind it.
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Verbatim excerpts from the public transcripts (auto-pulled at each mention's timestamp, lightly cleaned). Timestamps link into the video; "source page" opens that commentator's full analysis at this row. Click a mention's header line to expand it (one open at a time). For personal study — not investment advice.