In November 1914 the Royal Navy suffered a moral defeat when it lost two armoured cruisers at the Battle of Coronel. After Winston Churchill insisted that Sturdee should not be made a scapegoat for the events at Coronel, Admiral Lord Fisher sent a squadron commanded by Sturdee, with his flag in the battlecruiser , to the South Atlantic to seek out the German squadron, commanded by Graf Maximilian von Spee, which had caused the damage at Coronel. This decision was compounded by the fact that Fisher "detested" Sturdee and wanted to remove him from the Admiralty. On 8 December 1914, while coaling at Stanley, Sturdee encountered von Spee and the subsequent action became known as the Battle of the Falkland Islands. Von Spee, finding that he was engaged with a superior force, was forced to flee. In the course of the pursuit Sturdee's forces sank almost the entire German squadron, including the armoured cruisers, and . Only the light cruiser escaped but she was hunted down in March 1915. For his part in this important naval action Sturdee was created a baronet on 15 March 1916 with the title "of the Falkland Is."