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Canadian fund CPPIB bets £47m against Sainsbury

The FCA’s register shows that CPPIB began shorting Sainsbury’s on 25 November

Michael Bow,Russell Lynch
Tuesday 26 January 2016 00:08 GMT
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Sainsbury’s recently went public about a takeover of Homebase and Argos owner Home Retail Group
Sainsbury’s recently went public about a takeover of Homebase and Argos owner Home Retail Group

One of the world’s biggest investors has built up a £47m bet against Sainsbury’s in the wake of its shock bid for Homebase and Argos owner Home Retail Group.

The Canada Pension Plan Investment Board (CPPIB), which invests more than a quarter of a trillion dollars for Canadian pensioners, increased its bet against the grocer days after Sainsbury’s chief executive, Mike Coupe, went public about a takeover, Financial Conduct Authority records show.

As doubts about a deal grow in the City, a week ahead of Sainsbury’s “put-up-or-shut-up” deadline to make an offer, the FCA’s short-selling register also reveals that Citadel, the hedge fund founded by the billionaire Ken Griffin, has also opened up a £25m short position in recent days.

The FCA’s register shows that CPPIB began shorting Sainsbury’s on 25 November by borrowing 9.8 million shares, selling them on the market in the hope of buying them back more cheaply and banking the difference as a profit. But it rapidly increased the attack in December, leaving it with a bet against the grocer equivalent to 1.03 per cent of the company’s shares.

Concerns about the future of Homebase, seen as a major stumbling block, were put to rest when Home Retail sold the group. But concerns remain about the difficulties of integrating Sainsbury’s and Argos, as well as a potentially dilutative rights issue.

CPPIB has a host of property assets in the UK, including a 50 per cent stake in Victoria’s Nova office development and a 25 per cent stake in Westfield’s Stratford City shopping centre in east London. But the fund, which had C$272bn (£135bn) in assets last year, rarely shorts UK stocks and has only ever held three positions in total, according to FCA filings.

Alongside Sainsbury’s, CPPIB has previously shorted Drax and Tate & Lyle. A spokesman said: “We could be trading securities at any point in time and so we do not provide comments on our positions in any one security.”

Other funds, such as Lone Pine and Odey Asset Management, have cut their short positions against Sainsbury’s.

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