Clive Beagles and James Lowen have trimmed their JOHCM UK Equity Income fund’s holding in J Sainsbury (LON:SBRY), Citywire reports. The move followed a review of the blue-chip supermarket’s planned merger with rival Asda which revealed more downside than expected in the case of a rejection of the deal.
Sainsbury’s share price has been subdued in London this morning, having given up 0.31 percent to 318.50p as of 09:33 BST. The decline is largely in line with the losses in the broader UK market, with the benchmark FTSE 100 index currently standing 0.40 percent lower at 7,249.96 points.
Fund managers trim holding
Citywire reported yesterday that Clive Beagles and James Lowen had trimmed their JOHCM UK Equity Income fund’s holding in Sainsbury’s, despite remaining ‘overweight’ the stock, holding more than the market weighting.
“Further analysis highlighted more upside than we expected should the deal with Asda be cleared by the Competition and Markets Authority (CMA), but also more downside should it be rejected,” the analysts pointed out, as quoted by the newswire, adding that “given the current ongoing sluggish relative performance of the Sainsbury’s stand-alone business, and with the share price already up 40 percent year to date due to the Asda announcement, we took the opportunity to rebalance our weighting”.
CMA scrutiny continues
The news follows a report that Sainsbury’s boss had acknowledged that there were some ‘extreme scenarios’ where the regulatory remedies demanded might make it difficult to complete the grocer’s merger with Asda. He, however, noted that he was confident that the deal would be approved.
Beagles and Lowen noted that with the competition watchdog’s decision unlikely to be announced before April/May next year, they “will continue to monitor the situation”.