- Qatar Investment Authority (QIA) sells £306 million shares
- Sainsbury’s shares fall nearly 5%
- Year-to-date Sainsbury’s shares are down 7%
Sainsbury’s (SBRY) shares fell nearly 5% to 275p after the supermarket group said its biggest shareholder, the QIA (Qatar Investment Authority), had sold £306 million worth of shares at 280p each, a discount of around 3% to the prior closing price.
Prior to the sale, QIA owned 14.2% of the FTSE 100 group.
The timing of QIA’s sale has spooked investors who are wondering why it would reduce its stake now after a string of upbeat results and trading updates from Sainsbury's.
Back in July, the UK’s second-largest supermarket chain delivered a first-quarter trading statement pretty much in line with expectations in terms of grocery sales and maintained its full-year profit and cash-flow forecasts.
Sainsbury’s re-affirmed its full year to February 2025 outlook in an ‘aide-memoire’ on 12 September in which the company said: ‘We are confident of delivering strong profit growth in the year ahead and we expect to continue to grow grocery volumes ahead of the market.
‘Combined with continued growth in the Nectar profit contribution, a resilient Argos profit performance and continued strong cost save delivery, we expect this to deliver retail underlying operating profit of between £1.01 billion and £1.06 billion, growth of between five and 10%.’
EXPERT VIEW
Dan Coatsworth, investment analyst at AJ Bell said: ‘QIA has been trimming stakes in other holdings of late, including Barclays (BARC), Shell (SHELL), Vinci, Iberdrola, and Accor. In contrast, it has been increasing positions in the likes of OQ Gas Networks, Kingdee International Software and Haleon (HLN).
‘QIA first invested in Sainsbury’s in 2007 and at one point owned approximately a quarter of the group. Sainsbury’s share price last year bounced back after a difficult period, helped by the company making good strides with its food-first strategy.
‘Like rivals Tesco (TSCO) and Marks & Spencer (MKS), Sainsbury’s seems to have found the right recipe for success and has been fighting off competition from weaker rivals Asda and Morrisons to take market share.
‘QIA might feel that now is a good time to trim its stake in Sainsbury’s, selling into a market where other investors have become more interested in the supermarket. The fact it managed to offload a large chunk of shares at only a 2.8% discount to last night’s closing price implies there was decent demand.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Sabuhi Gard) and the editor (Martin Gamble) own shares in AJ Bell.
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