A number of hedge funds are gambling on Sainsbury’s share price falling because they believe its value could be hit by the supermarket price war.

Sainsbury’s is scheduled to publish its full-year results tomorrow, the final set under outgoing chief executive Justin King. Some analysts are forecasting that profits could fall short of the expected £780m pre-tax profit due to the supermarket price war.

Hedge funds, including Adelphi Capital, Eton Park International and Lone Pine Capital, have revealed big ‘short positions’ on Sainsbury’s, according to the Daily Mail.

Hedge funds Odey Asset Management and Lansdowne Partners have held similar positions on Sainsbury’s for a while.

Independent analyst Nick Bubb said: “The current consensus is that Sainsbury will struggle to hold the £780m profit before tax that it is expected to report for 2013/14 and plenty of people are starting to think that profits will fall back more sharply. If they’re right then the current 5.4% dividend yield is likely to increase.

Morrisons has recently launched a huge price cutting campaign in an attempt to boost sales and profits at the struggling grocer. Asda and Tesco are also embarking on big price cuts.