Quality Investing with Valuation Discipline in Europe: A Conversation with Dirk Enderlein of Wellington Management

Brown Advisory CIO Perspectives

In this episode of CIO Perspectives, Sid Ahl, Co-CIO for Private Clients, Endowments and Foundations at Brown Advisory, and his Co-CIO Erika Pagel, interview Dirk Enderlein, senior managing director and portfolio manager at Wellington Management in London. They discuss Dirk's investment philosophy, his experience building European equity strategies at Wellington Management—a private, employee-owned asset manager—and the factors behind the strong performance of European equities. Dirk emphasizes his investment approach, which is built on three core pillars: understanding a company's structural growth profile, analyzing the competitive landscape and applying a long-term valuation framework. His philosophy was shaped by lessons from the tech bubble, focusing on organic growth, defensive competitive positions and disciplined valuation, particularly avoiding overpaying for future growth.

The conversation covers how Dirk's strategy benefits from flexibility across all market caps, with a particular focus on small and mid-cap companies for attractive growth and valuation opportunities. He explains his structural preference for high-quality industrials and an overweight position in markets with strong shareholder rights, like the UK and Sweden. Dirk highlights shifts in sector allocations—such as increased investments in defense and cement companies—driven by macro trends like rising infrastructure and Defense Spending, regulatory changes and competitive dynamics. He also discusses selective opportunities in Consumer Staples (e.g., Unilever, British American Tobacco), Regional Banks (favoring boring, well-regulated regional banks) and the cautious approach to Health Care and Technology given valuation and competitive risks. Macro topics like tariffs, inflation and interest rates are addressed, with Dirk stressing the importance of flexibility, valuation discipline and readiness for transitions in market structure. Both Sid and Erika underscore Dirk’s disciplined and opportunistic approach, his focus on identifying industry transitions, and how these have led to outperformance, especially in periods of market rotation and global rebalancing. The episode concludes with a positive outlook on the European equity opportunity set, cautioning that valuation and macro risks remain, but highlighting the value of disciplined, bottom-up stock selection in navigating uncertain environments.

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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.

Brown Advisory is a client of Wellington Management, which is not receiving compensation for this podcast and commentary. There are no material conflicts in connection with this testimonial.

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