By Nell McKenzie
LONDON (Reuters) – Hedge funds have become optimistic about European companies that sell things people want but don’t need, especially luxury goods, according to a Goldman Sachs note on Wednesday seen by Reuters on Thursday.
Consumer discretionary stocks in Europe, such as home appliances, luxury goods and leisure, have sparked renewed buying interest among hedge funds.
However, they have sold short stocks exposed to potential tariffs from US President Donald Trump, the note said.
“As the tariff landscape continues to evolve, hedge funds have increasingly shorted tariff-exposed names,” the note said.
Disclosure of short positions in Italian spirits group Campari has reached an all-time high, according to a separate report from research firm Breakout Point.
Campari has three production sites in Mexico, the main one producing tequila under its Espolón brand, and one in Canada that produces local whiskey brand Forty Creek, according to its latest sustainability report.
Campari imports 27% of its U.S. sales from Mexico and Canada, according to Citi, Reuters reported on Monday.
Hedge funds with disclosed positions in Campari included Citadel and investment managers Arrowstreet Capital and Gladstone Capital, a regulatory filing from the Italian market authority showed.
Citadel declined to comment. Arrowstreet Capital, Gladstone Capital and Campari did not immediately respond to a request for comment.
A trader short an asset expecting its value to decline.
Much of the activity since mid-December has focused on stocks in Europe, while activity in UK equities has been relatively muted, the note said.
In 2024, luxury was a top small target for hedge funds. But since this most recent earnings season began, speculators have changed their bearish tune.
The number of hedge funds buying European cars and auto parts compared to those selling them has shrunk to a “multi-year low,” the note said.
(Reporting by Nell McKenzie; Editing by Amanda Cooper and David Evans)
