Morrisons has dropped more than 2% after a major stake was placed in the market.
UBS has confirmed trader speculation that it has place around 100m shares at 280p each, said to be on behalf of an institutional seller. While the seller has not yet been named, Threadneedle Asset Management, Invesco, Brandes Investment Partners and Walter Scott are the institutions which own stakes of more than 4%.
The news has sent the supermarket's shares down 6.7p to 282.6p.
The placing follows last week's announcement of a tie-up with online grocer Ocado. Commenting on the deal, Clive Black at Shore Capital said:
For Morrison we see this as a potential waste of capital that does not yet credibly lead to a profitable
grocery online business; management has set out a break even point of 2018. The upshot is that we underscore our sell stance on Morrison due to another downgrade and what we deem to be far too high an entry price to online grocery.
Following the placing news, Mike Dennis at Cantor Fitzgerald said:
We see this placing and the family selling stock as a clear indication in the lack of credibility in the current strategy and an endorsement of our view that falling return on capital employed and strategic mistakes will lead to further profit disappointments.
