Billionaire Terry Smith Sold Fundsmith’s Entire Stake in Apple and 11X’d His Position in a Company Whose Addressable Market Can Hit $149 Billion by 2032

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On Wall Street, the continuous stream of information can be relentless and overpowering at times. Sorting through a barrage of quarterly earnings reports and monthly economic data releases each quarter might cause significant details to slip by unnoticed.

By May 15th, institutional investors who manage $100 million or more in assets were required to submit Form 13F to the Securities and Exchange Commission. This submission, due no later than 45 days after the end of a quarter, offers a detailed view of the stocks, exchange-traded funds (ETFs), and certain investment options that prominent Wall Street investors have been buying and selling.

It’s not surprising that Warren Buffet, the CEO of Berkshire Hathaway and a billionaire, is often the most followed among money managers. However, it’s important to note that he isn’t the only billionaire investment guru who has made a name for themselves in the world of finance.

Known as the “British Warren Buffett”, billionaire Terry Smith of Fundsmith, is another asset manager that many investors keep a close eye on. Similar to Buffett, Smith is a passionate value investor who has a remarkable ability to identify fantastic opportunities that are often overlooked.

During the span of one year, from April 1st, 2024, to March 31st, 2025, Terry Smith, manager of Fundsmith’s 13Fs, sold off Apple (AAPL), Berkshire Hathaway’s top holding, and significantly increased the fund’s investment in a company whose market is projected to expand at an annual rate of 10.5% until 2032.

Britain’s top billionaire value investor sent Apple stock packing

Over the past six years or so, I’ve found myself deeply invested in Apple – it’s Berkshire Hathaway’s top pick! What I admire about this company is the unwavering loyalty its customers display towards the brand, the strategic leadership shown by CEO Tim Cook in expanding their higher-margin subscription services, and Apple’s exceptional capital-return program that sets them apart on a global scale.

Beginning in 2013, Apple initiated a share buyback program, purchasing approximately $775 billion of its own shares. Consequently, the number of outstanding shares has decreased by over 43%. This action has boosted earnings per share (EPS) and enhanced the appeal of Apple stock for investors who prioritize value.

In contrast to the advantages, Britain’s own ‘Warren Buffett’ divested all of his fund’s holdings in Apple within the past year, offloading a total of 1,597,544 shares.

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One plausible explanation for this selling action could be that Fundsmith was cashing in on their profits. From when they initially invested in Apple during the third quarter of 2022, to some time in the third quarter of 2024, the company’s shares experienced a significant surge from around $150s to approximately $220s. This substantial increase over two years for a megacap company might have tempted Fundsmith’s billionaire head honcho to collect his winnings and move on.

But there may be more to this selling activity than meets the eye.

In simpler terms, back from 2015 to 2019, you could buy shares of Apple (the iPhone maker) for anywhere between 10 and 20 dollars for every dollar of its trailing-12-month earnings per share (EPS). However, as of now, after the market closed on July 21st, a single share costs about 33 dollars for every dollar of its trailing-12-month EPS. This means the stock is significantly more expensive than it was before. Not only is the current market at one of its highest valuations in over 150 years, but it’s been a while since Apple stocks were this pricey consistently.

What makes Apple’s multiple expansion especially concerning and potentially explains why Terry Smith decided to sell its stock, is the company’s stagnant growth over time. From the close of fiscal year 2021 to fiscal year 2024 (which ends in late September for Apple), its net income dropped from $94.7 billion to $93.7 billion. However, due to Apple’s aggressive share repurchase program, its earnings per share increased from $5.67 to $6.11. If investors delve deeper into the numbers, they will find that Apple’s physical devices have been underperforming for more than three years.

While Apple’s AI investments could potentially rekindle its expansion, the fact that its share price is high and it hasn’t seen any increase in net earnings makes for an unattractive investment scenario.

Billionaire Terry Smith believes this stock has legs

Just like Warren Buffett of Berkshire, Terry Smith, the wealthy investor at Fundsmith, has been meticulous with his buying decisions. From the end of March 2024, he’s expanded seven existing investments and acquired interests in four fresh stocks. Among these eleven new acquisitions, Zoetis – a company specializing in animal health medicines and diagnostics (ZTS) – is particularly noteworthy.

Over the past three years, I’ve noticed that Fundsmith had been maintaining a steady range of around 220,000 to 265,000 shares of Zoetis stock per quarter. However, something quite significant happened during the first quarter – an impressive purchase of 2,319,158 shares of Zoetis stock. This sudden acquisition boosted Fundsmith’s position by a staggering 1,020% in just three short months.

One plausible rationale for considering Zoetis as a promising company is the persistent expansion in the worldwide animal healthcare sector. The demand for livestock medications and the continuously increasing market for companion animals (such as dogs and cats) predicts that the global animal health market will escalate from $67 billion in 2024 to an estimated $149 billion by 2032, according to Polaris Market Research.

Furthermore, sales data from the American Pet Products Association indicates that annual spending in the U.S. pet industry remains consistent, even during challenging times for pet owners. This is because pets are frequently considered as family members, with owners showing a readiness to spend generously to maintain their loved one’s health and happiness.

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It’s thought that Terry Smith, the wealthy investor, is particularly impressed by Zoetis’ leading position in the animal health industry. With over 300 products catering to eight different species of animals, and 17 treatments each generating more than $100 million annually, Zoetis holds the largest share of the global animal health market. Although brand-name therapies have a limited period of sales exclusivity, the expansion opportunities, pricing advantage, and high profit margins associated with launching new drugs make it a worthwhile investment.

Beyond this, it’s clear that Zoetis has shown a keen interest in organic growth to broaden its range of products and services. Over the course of this past decade, they have made strategic acquisitions such as Performance Livestock Analytics and Fish Vet Group to enhance their diagnostic capabilities, and they even bought Basepaws, a genetics company focusing on pet care that fits neatly into their diagnostic and new drug development initiatives. The consistent growth of Zoetis’ ecosystem means that the loss of sales exclusivity for a single drug won’t cause any significant turbulence.

In summary, it’s possible that billionaire Terry Smith finds the current valuation of Zoetis appealing due to its relatively low price. According to predictions on Wall Street for 2026 EPS, a share of Zoetis is being sold for less than 22 times projected earnings. This is a significant 34% reduction compared to its average forward-year earnings multiple over the past five years.

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2025-07-25 11:31