Sainsbury’s Shares Rally Despite Being the Most-Shorted London-Listed Stock

Sainsbury's (LON: SBRY) shares have climbed more than 17% over the past month, despite the supermarket group currently holding the title of the most shorted London-listed stock.

According to data from Short Tracker, fund managers have disclosed short positions amounting to 7% of Sainsbury’s shares. 

AKO Capital LLP leads with a 1.5% position, followed by Ilex Capital Partners and BlackRock Investment Management UK.

The rally comes despite the broader scepticism among hedge funds. Since falling to around 223p on April 10, shares have rebounded to above 273p, recovering ground lost earlier this year. 

Year-to-date, however, the stock remains down nearly 1%.

The beginning of the rebound came shortly before Sainsbury’s recent results and has also coincided with the recent rally in markets in general. Sainsbury’s is also considered a more stable and defensive stock, and so is less prone to volatility during times of uncertainty.

In its results, Sainsbury announced a £250 million special dividend and £200 million in share buybacks, contingent on the sale of Sainsbury’s Bank. 

CEO Simon Roberts highlighted a rise in grocery market share and an increase in sales. Cost savings of £350 million helped lift underlying operating profit.

Still, the performance of Argos remains a concern, with annual sales down 2.7% and profits sharply lower. 

Overall, analysts remain split in their view of Sainsbury's shares, with seven assigning it a Buy rating, three giving it a Hold rating and two a Sell rating, according to data compiled by TradingView. Even so, investors are seemingly bullish on Britain's second-largest food retailer.