Hedge funds take aim at Sainsbury’s amid “challenging” period as supermarket giant’s shares slide

Sainsbury's

A number of high-profile hedge funds are again ramping up bets against UK supermarket giant Sainsbury’s.

Third Point, along with AHL and GLG Partners, Man Group’s systematic and discretionary hedge fund units, have increased their short positions in the UK supermarket giant recently, according to regulatory disclosures made to the FCA since the start of September.

BlackRock Investment Management has also built a 2.65 per cent net short in the FTSE 100 company, while Citadel and Pelham Capital also maintain negative wagers against what is now regarded as the UK’s most shorted stock.

Sainsbury’s share price has fallen over the summer, from a June high of 209pp to a low of 179.15pp at the start of September, and has continued to trend downwards over the past fortnight, dipping 2 per cent at one point last week.

The UK’s second biggest supermarket chain – and one of the ‘Big Four’ grocers alongside Tesco, Asda, and Morrisons – had earlier been a key short bet for hedge funds amid the initial panic buying at the checkouts when lockdown began in March.

But as supermarkets’ share prices held up throughout the initial stages of the pandemic, many managers were ultimately forced to retreat, closing positions without taking any profits, according to London-based equity analytics firm Ortex.

More recently, though, Sainsbury’s has reportedly lagged the performance of competitors such as Tesco, Lidl and Aldi, and CEO Simon Roberts has warned of “materially increased costs” for the company.

In a July statement, Roberts said: “The coming weeks and months will continue to be challenging for our customers and our colleagues and we do not expect the current strong sales growth to continue.”