The German Equities Thread

How about it ? I’m not sure it will gain much traction but afterall it is a very important market in Europe.

So I’ll start :

Hawesko is getting kicked out of the SDAX on 22 September.

It was announced on 03 September but I am not seeing much movement in the share price, aside from normal volatility.

Is this a non-event ? I don’t think so.

I rather think that this news has been very poorly communicated and that people are just going to freak out on 22 September when they can’t find Hawesko in the SDAX.

I think it 's still a great company to own long term, but there might be a couple of euros to make by selling it now and buying it in 3 weeks again. We’ll see.

Somewhat related: I recently bought a large (large for myself) position in DRG.UN (TSX traded), which is a Canadian managed, German commercial REIT. Very juicy yield and it seemed like German cap rates are stronger than anything this side of the pond. Love the properties. My issue with German equities generally is I find European markets more opaque when it comes to reporting (that may be my own lack of experience in finding European reporting) and of course the difficulty in trading on European markets as a foreign investor. Me directly holding German stocks is a tax headache. So I do have a German small cap ETF, along with the kind of German REIT, but that’s the limit of that journey for me. I solidly believe in the economy there though, and it offers some currency diversification for myself away from oil correlated assets (which is pretty much my entire human and financial capital).

Geo what kind of properties does that REIT own? I follow a few that are yielding in the 3%-4% range. I don’t know DRG at all but a quick google search shows it is yielding 8%. Is that right? A German REIT yielding twice the market rate?

Go to their website and look at their investor materials. They have a great presentation outlining the business. Commercial office buildings is the asset class and they’re exclusively in Germany. There are plenty of Canadian REITs yielding 6%+. This one was just even more attractive as it offered geographic diversification for me.

id kill my mil for 8%

Its out there. Go find it. :slight_smile:

Hey guys. Lazy question:

Where is the German reporting website? I couldn’t understand why there are multiple places you can get the filings and what is he difference between them (or am I confused?).

To my knowledge what you are looking for does not really exist in Germany. There is the ebundesanzeiger but it’s a piece of shit.

^ This is what I mean in that its very hard to do any diligence for German outfits. Transparency isn’t near North American levels, at least not consistently.

I disagree with that statement. Any decent company that is listed has an IR website. You can get audited financials there.

Thanks for the tip. I’m going to do some more work on this REIT. Just looking at UBS research there. The highest yielding European REIT in their universe (which doesn’t cover everything but is pretty good) is 5.7%. The highest Germain REIT yield is 4.9% for Alstria Office which is close in size to DRG. If DRG was listed in Europe, I don’t see any reason why it wouldn’t trade at a 5% yield also. So it appears to be trading at a discount to fair value of around 35%-40%. There must be a catch here somewhere, no?

^ If there is a catch, I haven’t found it. Let me know if you find something shaddy though. The manager is a competent Canadian outfit though, I’m not worried there.

Nothing obvious jumping out at me either. The analysts covering Dream Global seem to all be Canadian or at least follow the Canadian REIT sector whereas the analysts covering most German REITs are European. Similarly, I suspect the investor base for DRG is mostly domestic Canadian and likewise for domestically-listed German REITs. Hence this may just come down to some market inefficiency.

Say it ain’t so! :slight_smile:

Or you both haven’t caught it yet ha ha I’m always skeptical of mispricings, given that the algos are constantly running.

I have been saying that for years. ****Europe is basically a frontier market. It looks nice and clean on the surface because unknowing investors fall for the illusion of Germany’s economic prowess and cultural sophistication, but if you dig deeper you find tons and tons of bizarre investments. Sure you can never go wrong with a BMW, VW, SAP or BASF, but as soon as you move out of the safe DAX womb you enter frontier market territiory. The number and size of scams going on in Germany is mind boggling. From outright criminal binary option trading schemes to hollow companies such as Zalando (five years of growing losses and now the IPO?).

Real estate in Germany is also quite dangerous. Most REITs have invested heavily in the Hamburg area and the hip quarters of Berlin over the last years, driving up prices and reaping profits. Might not be a bubble but certainly an overheated market.

The only outstanding development in the German market for the last years was the introduction of Deutsche’s x-tracker ETFs which offer decent performance in a variety of fields.

My tip is to find a decent PE outlet and gain exposure German private companies, especially in the South. Those so called “shadow world champions” are market leaders in their very narrow field (mostly high precision manufacturing and narrow-use IT). In this area you could draw 9-12% p.a. from stable growth companies, but the tax implications for non-EU investors are quite substantial.

Other than that, every now and then German banks and insurers offer interesting certificate products. The following Generali Germany product offers a 50% participation on the upside of the EUROSTOXX 50 with a cap of 25% (both part and cap rate vary) and no downside except inflation: Based on past performance my statistical model suggests that with the initial 50/25 terms the product would yield 5% p.a. over the next 20 years with a st.d. of 2%. Not to bad eh…


If you mean that you are in frontier territory outside of the DAX30 then I will tell you that you have never bothered looking and that you have no clue what you are talking about.

I am sure that this is not what you meant though, as the SDAX, MDAX and TDAX also offers national champions.

You do have a very valid point though, that outside of the Prime Standard things start looking very sketchy very fast.

I would never invest in a firm quoted on the Entry Standard or Quotation boards, which aren’t even regulated markets.

I also don’t have a very good opinion of the regional exchanges like München, Düsseldorf or Berlin.

May I ask why? I always go there for best execution on large titles and never encountered any problems.