David Walton, Manager of Marlborough’s European Special Situations Fund, shares his views on whether the emergence of a new world order should impact investment thinking and highlights three companies that he expects to prosper, irrespective of any shake-ups.
In late January, just days after the World Economic Forum (WEF) in Davos, the European Union announced a landmark trade partnership with India. Ursula von der Leyen, President of the European Commission, hailed it as “the mother of all deals”.
The agreement was supposedly 20 years in the making. Since the prospect of a radical restructuring of geopolitical and geoeconomic allegiances was a key theme at the WEF, it is perhaps not entirely surprising that the signatories suddenly found the dotted line at last.
Should investors looking for opportunities in Europe be excited? More broadly, should they be notably moved by the notion of a new world order in which the “middle powers” – to use the phrase at the heart of Canadian Prime Minister Mark Carney’s WEF address – seek to exert more control over their own destinies?
In my view, no. If I were asked to rate the impact of such developments on the stock-picking process for our fund, with zero representing no effect at all and 10 representing a significant shake-up, I would struggle even to see beyond zilch.
Macro factors always play some part in investment decisions, of course. It is also quite interesting to witness the reshaping of international relationships the face of a second Trump presidency and other disruptive dynamics.
Yet for a strategy like ours, which specialises in European smaller companies, what happens on the global stage is far from the be-all and end-all. However dramatic the backdrop might be, an individual business’s unique attributes are still what matters most.
This can be a source of irritation for my friends in marketing circles. They often seem mildly dismayed when I protest that headline-grabbing events do not necessarily produce enthralling new narratives from the perspective of portfolio construction.
For example, a little over a year ago I was asked to name some European stocks capable of flourishing in light of Trump’s return to the Oval Office.
A few months later I was asked to name some capable of shrugging off tariff turmoil. Now the challenge is to name some capable of prospering in what Carney called a period of “rupture”.
Frankly, I could easily name the same businesses in each instance. We hold many of the companies in our fund for several years – more than a decade in some cases – for the simple reason that we expect them to deliver growth over the long term, irrespective of the macro environment.
Naturally, there are times when some are more in favour than others. There are also times when new holdings are introduced to the mix or existing holdings take their leave.
But the triggers for these shifts are seldom to be found on the front pages or in politicians’ speeches. They are instead most likely to arise from our own analysis of fundamentals and from our direct engagement with businesses and their senior management teams.
With all the above in mind, here are three European smaller companies that we consider particularly appealing at present. All being well, we will still feel much the same about them if and when the age of “rupture” has played out.
Thermador
Focused on its home market of France, Thermador provides plumbing supplies for residential and industrial use. Founded in the late 1960s, it has grown over time by acquiring small distributors and using a decentralised model that allows them a degree of autonomy.
We first invested in the business in 2016, when its consolidated sales and net income totalled €231 million and €20 million respectively. These figures had more than doubled by the 2020s.
Einhell
Einhell is a Bavarian manufacturer of power tools. We regard it as an excellent example of a rapidly growing business within an economy that has been less than stellar for a number of years.
Driven by innovations such as a single battery that fits all products, Einhell’s sales have risen by around 10% annually since 2018 – the year after we originally took a stake. In the first half of 2025 they increased by 9%, resulting in the company’s highest-ever revenues.
Scanfil
Headquartered in Finland, Scanfil is an international contract manufacturer and system supplier for the electronics industry.
With a product range that includes communications network devices, automation modules, vending machines and medical equipment, it spans a variety of sectors – industrial, energy and medtech / life sciences foremost among them.
Underpinned by a series of successful acquisitions, the company has facilities in Europe, the US, China, Asia and Australia.
Beyond its fundamental strengths, an added attraction for us is that its flexible production base is likely to serve it well if – as suggested amid the thrills and spills of the WEF – the map of international trade is sensationally redrawn during the years to come.
Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. The writer’s views are their own and do not constitute financial advice.
This information should not be relied upon by retail clients or investment professionals. Reference to any particular investment does not constitute a recommendation to buy or sell the investment.
Main image: milad-fakurian-tGTa40GKSRI-unsplash
