Unilever (UL) Looked Undervalued. Why Was It Sold?

Brown Advisory, an investment management company, released its “Brown Advisory Global Leaders Strategy” for the second quarter of 2026 investor letter. A copy of the letter can be downloaded here. Brown Advisory’s Global Leaders Strategy delivered a net return of 4.6% in the second quarter of 2026, underperforming its benchmark, the MSCI ACWI Net Index, which returned 14.9%. The relative weakness was driven mainly by underexposure to semiconductors and technology hardware, while software, cloud services, and financial holdings also weighed on performance. The strategy benefited from holdings in areas tied to AI infrastructure, with semiconductor exposure and AI-related investments gaining from strong demand. Looking ahead, Brown Advisory sees an attractive environment for active stock-picking, with its ready-to-buy list at its highest level since the COVID-19 period and an estimated 12%-13% average five-year base-case IRR, while maintaining a focus on quality, valuation discipline, and long-term cash-flow generation. In addition, please check the Fund’s top five holdings to know its best picks in 2026.

In its second-quarter 2026 investor letter, Brown Advisory Global Leaders Strategy Fund highlighted stocks like Unilever PLC (NYSE:UL). Unilever PLC (NYSE:UL) is a global consumer goods company offering a broad portfolio of personal care, home care, beauty, and food products. The one-month return of Unilever PLC (NYSE:UL) was 2.41% while its shares traded between $54.75 and $74.98 over the last 52 weeks. On August 7, 2026, Unilever PLC (NYSE:UL) stock closed at approximately $63.13 per share, with a market capitalization of about $135.64 billion.

Brown Advisory Global Leaders Strategy Fund stated the following regarding Unilever PLC (NYSE:UL) in its Q2 2026 investor letter:

We exited our investment in Unilever PLC (NYSE:UL) in May. Unilever has been a day-one investment in the Strategy, with a holding period of 11 years. Over that time, while compounding at mid-single digits and contributing positively to the strategy’s absolute returns, it fell behind our double-digit annualized return target. Unilever continued: We have been patient with the investment and the turnaround strategy of Unilever’s new management team. However, despite the turnaround progressing successfully and in line with our thesis—with Unilever growing revenues at mid-single digits and thereby leading its consumer peers over the last two years—we have failed to see the levels of returns and compounding we target in the Strategy. While valuation looks attractive—and has for a long time—we are ultimately exiting due to what we assess as a less attractive industry, as the moats have narrowed over time despite good execution by management. The company has started to execute the new strategy very well. Volume growth recovered after 2022 to low single digits, supported by 1–3% price growth, with overall organic growth in the mid-single digits. This was in line with our expectations. Unilever also regained market share, outperforming its peers in consumer staples over the last two years, driven by a refocus on its power brands. Management separated its tea business in 2022, followed by the spin-off of ice cream in December 2025 and the subsequent announcement of the separation and combination of its food business with McCormick in March 2026—all strategic decisions that sharpened the focus on its core consumer and beauty brands. We think Unilever is making the right strategic moves. We expected that a separation of Foods would unlock value, and McCormick is a logical partner. This appears to be the last significant strategic step in Unilever’s development. However, the market is not rewarding this. After years of restructuring and cleaning up a matrix hodgepodge structure, our assessment of the value in Unilever is not shared by the market, and we seem to be wrong—our investment in Unilever has not worked. We see better opportunities to allocate capital elsewhere and have exited Unilever in favour of our new investment in global food caterer Compass Group (Click Here To Read The Full Text).

In another article, we covered Unilever PLC (NYSE:UL) and shared Fundsmith’s views on the company. In addition, please check out our hedge fund investor letters Q1 2026 page for more investor letters from hedge funds and other leading investors.

READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years 

Disclosure: None. This article is originally published at Insider Monkey.