Morrisons hit by shorted shares

Investors take a short position in shares when they believe the stock price is heading for a tumble.

Some 4.7 per cent of the Bradford-based supermarket chain’s shares were out on loan, up four per cent on the previous month, according to data provider Markit.

Only troubled cruise ship operator Carnival and newspaper publisher Trinity Mirror had more shares out on loan at 7.9 per cent and 7.0 per cent respectively.

Short-sellers borrow shares in stocks they think will fall in value. They make money by buying them back at a lower price once the shares have declined.

Morrisons has been trailing its rivals due to a lack of convenience stores and an online offering and has lost market share. It is expected to announce plans for a food website on Thursday.

Analysts at Shore Capital expects Morrisons to report a fall in sales for much of the second half, with like-for-like sales down 2.5 per cent.

Shore Capital analyst Clive Black said: “With respect to profitability, we have downgraded our forecasts for Morrison’s twice over the last year and we believe that there is a high probability that we may be cutting our 2013/14 estimates again.”

Invesco Perpetual is now the largest shareholder in Morrisons after BlackRock sold stock at the beginning of the year.