Terry Smith, a billionaire, offloaded Fundsmith's entireApple shareholding and significantly increased his investment in a business, whose potential market could reach an astounding $149 billion by 2032.

Terry Smith, the wealthy businessman, disposed of Fundsmith's entire investment in Apple and amplified his shares in a company, which could potentially see its addressable market escalate to $149 billion by 2032.

Terry Smith, the billionaire investor known as the "Warren Buffett of Britain," has made some significant moves in Fundsmith's portfolio. The most notable changes involve the complete dumping of Apple, the tech giant's No. 1 holding, and a substantial increase in Zoetis, the animal health medicines and diagnostics company.

Goodbye, Apple

Apple's lack of growth in net income from fiscal 2021 to fiscal 2024, despite a high valuation, seems to be the primary reason behind Smith's decision to sell Fundsmith's entire stake in the tech giant. Despite Apple's rising earnings per share due to aggressive share buybacks, the net income fell slightly from $94.7 billion to $93.7 billion over this period. This unfavorable combination of a historically expensive stock with no underlying income growth likely prompted the sale.

While AI investments at Apple might spark future growth, the stagnation in physical device sales over more than three years was a drag that Smith found unappealing.

Hello, Zoetis

On the other hand, Smith significantly increased Fundsmith’s position in Zoetis by more than tenfold (1,020%) in a single quarter. This strategic shift towards a faster-growing sector aligns with Fundsmith’s long-term investment criteria.

Zoetis's addressable market is projected to reach $149 billion by 2032, indicating substantial growth potential that likely attracted Smith’s capital. Prior to this, Fundsmith held a relatively flat position in Zoetis over several years.

The Pet Industry and Zoetis

The global animal health market is projected to grow from $67 billion in 2024 to $149 billion by 2032, and Zoetis holds the largest share of this market. The company offers over 300 products spanning eight animal species, and 17 therapies generate at least $100 million in annual sales.

Moreover, U.S. pet industry expenditures don't decline on a year-over-year basis, regardless of challenges, providing a stable foundation for Zoetis's growth.

The Market and Apple

Meanwhile, the stock market is currently at one of its priciest valuations spanning more than 150 years. Apple's high valuation, combined with its lack of growth, makes it a less attractive investment for Smith.

Form 13F and Fundsmith's Moves

Form 13F, which provides an up-close look at which stocks, exchange-traded funds (ETFs), and select options Wall Street's smartest asset managers have been buying and selling, will reveal more of Fundsmith's moves in the coming weeks.

Since kicking off its share-repurchase program in 2013, Apple has bought back around $775 billion worth of its own stock and reduced its outstanding share count by more than 43%. However, this aggressive buyback program did not prevent the decrease in net income.

A Look at Terry Smith's Other Moves

Over a four-quarter period (April 1, 2024 - March 31, 2025), Terry Smith more than 11X'd his fund's stake in a company whose addressable market is expected to grow by a compound annual rate of 10.5% through 2032.

Between the third quarter of 2022 and the third quarter of 2024, shares of Apple rallied from roughly the $150s to the $220s. During the same period, Smith, the billionaire investor of Fundsmith, has added to seven existing holdings and purchased stakes in four new stocks since the end of March 2024.

The Influence of Warren Buffett

Warren Buffett of Berkshire Hathaway, who is often referred to as the most-followed of all money managers, has appreciated Apple for its exceptional customer loyalty, CEO Tim Cook's leadership in building up its higher-margin subscription services segment, and Apple's world-leading capital-return program. However, these factors seem to have had less appeal for Smith.

In contrast, Zoetis's willingness to grow inorganically to expand its ecosystem of products and services, combined with its promising growth prospects, likely caught Smith's attention.

[1] Sources: Company filings, market research reports, and financial news outlets.