Price war prompts a record high of bets against Supermarket giants
HEDGE funds are making record bets against the health of the supermarket sector, with the average interest in the UK’s four listed grocers breaking the 11 per cent barrier for the first time.
Sainsbury’s and Morrisons are now the two most-shorted constituents of the FTSE 100 behind oilfield services provider Petrofac, according to a report published by Markit yesterday.
“UK supermarkets were a major high conviction short play of last year as a mixture of new competition, changing consumer behaviour and accounting irregularity sent share prices in the sector down sharply,” Markit analyst Simon Colvin said.
As of this week, Sainsbury’s had 16 per cent of shares being shorted compared with 9.5 per cent last year, while Morrisons stood at 15.8 per cent, up from 6.5 per cent.
Online grocer Ocado is a long-term target of short sellers, with 10.5 per cent of its share currently out on loan while Tesco’s shorted position stood at 2.4 per cent.