Activist investor Petrus Advisers Ltd. has shifted its position on Deutsche Pfandbriefbank AG, moving from a long to a short position due to a bearish outlook on banks with substantial commercial real estate exposure. This comes after the bank's shares have fallen 8.6% in Frankfurt this year, leading to a decrease in its market value to €894 million ($939 million).
According to InvestingPro, Deutsche Pfandbriefbank, also known as PBBG, currently has an adjusted market cap of 942.50M USD. The company's P/E ratio stands at 6.07, indicating that it is trading at a low earnings multiple. It's worth noting that the company has been dealing with declining revenues, with a reported -7.27% growth in the last twelve months (LTM2023.Q2) and a quarterly revenue growth of -0.82% in FY2023.Q2.
Petrus Advisers, which previously held a 3% stake in Deutsche Pfandbriefbank and initiated green lending targets and job cuts, is now adopting a different strategy. The change in stance reflects the investor's concerns over the bank's significant exposure to commercial real estate, a sector facing potential risks amid uncertain market conditions.
This isn't the first time Petrus Advisers has made notable moves in the German banking sector. The activist investor has seen profitable returns from investments in smaller German banks such as Comdirect, which was acquired by Commerzbank AG (OTC:CRZBY), and Aareal, bought by Advent and Centerbridge.
In addition to its change of position on Deutsche Pfandbriefbank, Petrus Advisers has recently shorted Bawag Group AG. This decision was driven by concerns about Bawag's deposit base, its exposure to US real estate, and loans made to management. These factors have contributed to a significant slump in Bawag Group's shares.
The recent actions taken by Petrus Advisers highlight the investor's cautious approach towards banks with significant real estate exposure, particularly at a time when global markets are witnessing heightened volatility.
On a related note, InvestingPro Tips suggest that PBBG's poor earnings and cash flow may force dividend cuts. The company's stock is reportedly in oversold territory, and it's trading near its 52-week low. For more in-depth analysis and additional tips, consider checking out the InvestingPro platform.
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