In our latest episode, Sid and Erika are joined by Dirk Enderlein, senior managing director and portfolio manager at Wellington Management in London. Wellington is one of the world’s leading asset managers and a long-standing partner of Brown Advisory. The firm’s European equity strategy, managed by Dirk, is one of Brown’s largest investments with an outside manager.
Dirk joins the podcast at a moment of renewed interest in European markets. With recent outperformance and structural shifts across industries, he shares how his philosophy and portfolio positioning are capturing emerging opportunities.
Highlights:
- Dirk’s investment philosophy is based on three pillars: understanding a company’s structural growth profile, evaluating the competitive landscape and applying a valuation framework grounded in decades of data. His approach was shaped by lessons from the tech bubble and has remained consistent ever since.
- The team has increased its exposure to cement companies over the past several years. New regulations such as the EU’s carbon border adjustment mechanism, coupled with infrastructure spending and industry consolidation, have improved competitive behavior and pricing power across Europe.
- Dirk and his colleague began researching the defense space before Russia’s invasion of Ukraine in early 2022. That prior work allowed them to increase their exposure quickly as central European governments ramped up spending. Their process included historical analysis of defense cycles and long-term growth modeling.
- The strategy maintains meaningful exposure to regional banks in markets like Ireland. These banks are focused on retail and SME clients and have benefited from post-crisis consolidation and regulatory discipline. Dirk looks for conservative capital structures and minimal wholesale lending, describing these as “boring” banks by design.
- In consumer staples, the team is focused on specific company dynamics. Unilever is seen as a turnaround story with growth potential in markets like India. British American Tobacco is viewed as well-positioned in the modern nicotine space, particularly in products like white pouches and vaping devices.
Dirk, Sid and Erika cover a range of additional topics in a wide-ranging conversation—from domestic spending dynamics to shifts in Health Care and Banking. Sid and Erika closed the episode with their own reflections on the macro backdrop and shared how they’re thinking about positioning portfolios for clients in the current environment.
We hope you enjoy the episode and welcome your questions and feedback.
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The views and opinions expressed in this video are those of the speakers and do not necessarily reflect those of Brown Advisory or Wellington Management. These views are not intended to be and should not be relied upon as investment advice and are not intended to be a forecast of future events or a guarantee of future results. The information provided in this video is not intended to be and should not be considered to be a recommendation or suggestion to engage in or refrain from a particular course of action or to make or hold a particular investment or pursue a particular investment strategy, including whether or not to buy, sell or hold any securities mentioned. It should not be assumed that investments in such securities have been or will be profitable. To the extent specific securities are mentioned, they have been selected by the author on an objective basis to illustrate views expressed in the commentary and do not represent all the securities purchased, sold or recommended for advisory clients. The information contained herein has been prepared from sources believed reliable but is not guaranteed by us as to its timeliness or accuracy and is not a complete summary or statement of all available data. This piece is intended solely for our clients and prospective clients, is for informational purposes only and is not individually tailored for or directed to any particular client or prospective client.
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Terms and Definitions:
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The FTSE 250 Index represents mid cap stocks traded on the London Stock Exchange (LSE), which pass screening for size and liquidity. FTSE 250 Index constituents are traded on the LSE's SETS trading systems. The FTSE 100 Index is a market-capitalisation weighted index of UK-listed blue chip companies. The index is part of the FTSE UK Series and is designed to measure the performance of the 100 largest companies traded on the London Stock Exchange that pass screening for size and liquidity. FTSE 100 constituents are all traded on the London Stock Exchange’s SETS trading system.
“FTSE” is a trademark of the London Stock Exchange Plc and The Financial Times Limited and is used by FTSE International Limited (“FTSE”) under licence. Return on equity (ROE) is a measure of a company's financial performance. It is calculated by dividing net income by shareholders' equity. ROE is useful for comparing a company’s profitability over time or against competitors within the same industry.
Free cash flow (FCF) is the amount of cash that a company has left after accounting for spending on operations and capital asset maintenance. Investors and analysts rely on it as one measurement of a company's profitability.