Hedge fund in £275m bet against UK grocers

AN American hedge fund giant has placed bets worth £275 million against UK supermarket shares.

The move by Citadel – owned by US billionaire Ken Griffin – suggests Britain’s supermarket chains might not be immune to the coronavirus outbreak, even though their shares have held firm so far.

Citadel has been quietly building up short positions in both Sainsbury’s and Morrisons in recent weeks, meaning it will profit if the food retailers’ share prices fall.

Short selling is where investors borrow shares, sell them and then buy them back – hopefully at a lower price – before returning them to the owner and pocketing the difference.

It has amassed a short position accounting for 3.6 per cent of Morrisons shares, worth £162million – one of the largest on record in the UK and up from 2.4 per cent a month ago. Citadel first disclosed a bet against Sainsbury’s at the end of last month and has increased that position to 2.5 per cent of the group’s share capital, worth around £113 million.

A source close to the hedge fund said Citadel Advisors and Citadel Europe – both shorting Morrisons and Sainsbury’s – operate separately.

Citadel is also betting against shares in troubled airline group easyJet to the tune of £56million, and has placed a £51million bet against kitchen supplier Howden Joinery.

Earlier this month, Citadel set up a temporary trading floor at a hotel in Florida that had been shuttered in the wake of the Covid-19 crisis to allow traders to keep operating.

Citadel declined to comment.