Traders betting against grocers have made a killing after Amazon's industry-rattling Whole Foods deal

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Jeff Bezos

AP

It's been a lucrative few days for investors betting on the demise of the grocery industry as we know it.

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Ever-expanding juggernaut Amazon's $13.7 billion acquisition of Whole Foods spurred share losses in the likes of Kroger, Target and Walmart, amounting to about $500 million of gains for short speculators last week alone, according to data compiled by financial analytics firm S3 Partners.

The short-seller profits reaped from the rubble of Kroger's stock price were particularly outsized compared to the size of the company's overall short interest.

The grocery chain has just $650 million held short, compared to roughly $2 billion for both Target and Walmart, S3 data show. Still, Kroger was the second-most-profitable bearish bet in the whole market as its stock price plunged 28%. Target and Walmart provided the fourth- and fifth-biggest short returns, respectively.

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Now that organic grocer Whole Foods is under the Amazon umbrella, analysts are expecting the tech titan to further squeeze margins in an industry that already has razor-thin profitability thresholds.

While less diversified retailers like Kroger are seen taking the biggest hit, companies like Target - which gets roughly 20% of sales from grocery - are also seen coming under pressure in a retail environment that's already showing signs of decay.

That's not to say all short sellers had such a fruitful week. Those betting against acquisition target Whole Foods took it on the chin as the stock surged 19%, resulting in a nearly $200 million weekly loss.

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