September 17, 2018 / 4:09 PM / a year ago

UPDATE 1-Scottish fund Baillie Gifford cuts DIA stake to 8.6 pct

(Adds update on short positions)

MADRID, Sept 17 (Reuters) - Scottish fund Baillie Gifford has cut its stake in DIA to 8.6 percent from 10 percent as the Spanish supermarket group attempts to restore credibility after a string of poor results.

DIA is one of the most shorted stocks in Europe, while its biggest investor Letterone, which holds a direct and indirect stake of 25 percent, is expected to clarify its intention shortly over taking control of the company.

Letterone is controlled by Russian tycoon Mikhail Fridman.

In a Spanish stock market filing on Monday, Baillie Gifford disclosed it had sold 1 percent of its stake in the last five days. Its DIA had been above 10 percent since April 2015.

Spain’s stock market regulator said on Monday that investors holding short positions in DIA had fallen to 20.83 percent at Sept.14 from 21.53 percent previously disclosed at end-August.

The supermarket group, which is facing tough competition in its home market from local heavyweight Mercadona and rivals such as Lidl and Aldi, gained ground during an economic crisis which drew more cash-strapped customers into its stores.

But it has been struggling to find the right strategy now that the country’s economy is rebounding strongly.

DIA, which has lost more than two thirds of its market value since a 2015 peak, appointed a new chief executive officer last month and is due to present a new strategic plan in October. (Reporting by Emma González and Andres Gonzalez; additional reporting and writing by Jesús Aguado; editing by Alexander Smith)

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