iXbroker Editorial Insight
In a move turning heads on both Wall Street and across the global investing community, billionaire investor Terry Smith—frequently dubbed the “Warren Buffett of Britain”—has made an unexpected strategic pivot within his renowned Fundsmith Equity Fund. According to the latest quarterly filings (Form 13F), Smith has completely exited his high-profile position in Apple Inc. (AAPL), one of the world’s most recognized stocks and a long-standing pillar in many value portfolios, including Warren Buffett’s own Berkshire Hathaway. At the same time, Smith astonishingly increased his fund’s stake in animal health leader Zoetis (NYSE: ZTS) by more than 1,000% within a single quarter.
Let’s explore what this bold maneuver means and how it might signal deeper shifts for investors, sectors, and even the wider financial markets.
Why Terry Smith Sold Apple
Apple’s Stellar Run and Waning Value Appeal
Apple, with its historical brand loyalty, robust services segment, and relentless share buybacks, has long been the darling of blue-chip investors. Since 2013, Apple repurchased over $775 billion of its own stock, reducing its float by more than 43% and boosting EPS—a text-book move for increasing shareholder value.
However, as markets evolved, Smith chose to cash out, selling a reported 1,597,544 shares of Apple between Q3 2022 and Q3 2024. Several factors underpinned this decision:
- Profit-taking: After entering Apple at around 150andseeingpricesreachabove150 and seeing prices reach above 150andseeingpricesreachabove220, Smith’s fund secured strong returns in just two years.
- Valuation Creep: Apple now trades at 33x trailing-12-month (TTM) earnings, far above its historical average P/E. For a value-focused investor, this premium—especially in a sluggish growth environment—raises red flags.
- Slowing Growth: Despite rising EPS (thanks mainly to buybacks), Apple’s net income has actually declined slightly over the last three fiscal years, and core device lines have underperformed.
While Apple is rumored to have big plans in AI, Smith’s exit suggests he’s unconvinced that innovation alone can justify the hefty premium.
Why Zoetis? Betting Big on the Future of Animal Health
A Market Expected to More Than Double
Smith didn’t just rotate out of Apple—he massively ramped up Fundsmith’s position in Zoetis, purchasing over 2.3 million shares and multiplying the fund’s stake elevenfold in a single quarter.
Here’s why Zoetis looks so compelling:
- Explosive Market Growth: The global animal health market is forecast to grow at a stunning 10.5% CAGR, leaping from 67billionin2024to67 billion in 2024 to 67billionin2024to149 billion by 2032. This growth is powered by rising global pet ownership, expanding livestock needs, and the “humanization” of companion animals.
- Non-Cyclical Demand: Pet spending in the US, according to the American Pet Products Association, does not drop even in economic downturns—owners prioritize their pets’ health like family.
- Product Breadth & Leadership: With more than 300 products across eight animal species, and 17 therapies earning over $100 million each annually, Zoetis holds reigning market share and impressive pricing power.
- Valuation Edge: Zoetis trades at under 22 times 2026 forecasted EPS—a marked discount to its recent five-year average—a rare bargain in a fast-growing sector.
- M&A and Ecosystem Expansion: Recent acquisitions (Performance Livestock Analytics, Fish Vet Group, Basepaws) show Zoetis’ appetite for continual innovation in diagnostics and genetics, broadening its protective moat.
Smith’s wager: In a low-growth, richly-valued tech environment, secular, “boring” growth in animal health offers superior risk-reward.
iXDeep: Market Impact Analysis
Shifting Tides—From Hyper-Growth Tech to Defensive Secular Growth
Terry Smith’s strategic reallocation highlights two key themes that resonate across both crypto and traditional markets:
- Value Rotation and Risk Appetite
Smith’s decision echoes a broader market caution toward overvalued mega-cap tech names, with investors seeking new growth catalysts beyond the headline tech darlings. As uncertainty rises about future U.S. tech margins and innovation, funds flow toward “resilient growth” sectors.
- Implications for Forex and Crypto
- Forex: Rotation away from U.S. tech could dampen the USD’s “safe-haven” premium, as global capital hunts for diversified exposures, possibly favoring non-USD assets or sectors.
- Crypto: Parallels can be drawn with long-term crypto allocation trends, where investors rotate from hyped tokens to more defensible, adoption-driven projects that mirror Zoetis’ profile—solid products, recurring demand, and innovation.
- Broader Markets: Should this trend continue, expect increased volatility in high-flying technology stocks and a corresponding uptick in sectors previously considered defensive or overlooked.
iXbroker Takeaway:
Smith’s pivot is a classic lesson in contrarian value investing—don’t chase yesterday’s returns, spot tomorrow’s growth stories. Both tradfi and crypto investors should note: big smart money is finding fresh opportunity well beyond the usual blue chips.
