Hedge Funds Turn Optimistic on European Luxury Goods

By Nell Mackenzie

LONDON (Reuters) – Hedge funds have turned optimistic about European companies that sell non-essential items, particularly luxury goods, according to a Goldman Sachs note on Wednesday seen by Reuters on Thursday.

Consumer discretionary stocks in Europe, such as household appliances, luxury items, and leisure products, have seen renewed buying interest from hedge funds.

However, they have shorted stocks vulnerable to potential tariffs imposed by U.S. President Donald Trump, the note indicated.

> “As the tariff landscape evolves, hedge funds have increasingly shorted tariff-exposed names,” the note stated.

Reported short positions in Italian spirits group Campari (LON:0ROY) have reached an all-time high, as per research firm Breakout Point.

Campari operates three production facilities in Mexico and one in Canada, with its primary site producing tequila under the Espolon brand and the Canadian site producing the local whisky brand Forty Creek, according to its latest sustainability report. Citi noted that Campari imports 27% of its U.S. sales from these regions.

Hedge funds with disclosed positions in Campari include Citadel, Arrowstreet Capital, and Gladstone Capital (NASDAQ:GLAD), according to a regulatory filing from the Italian markets authority.

Citadel declined to comment, while Arrowstreet Capital, Gladstone Capital, and Campari did not respond promptly to requests for comment.

A trader shorts an asset anticipating a decline in its value.

Most of this trading activity since mid-December has been primarily focused on European stocks, whereas UK equities saw relatively muted activity, the note remarked.

In 2024, luxury items were a key target for hedge fund short selling. However, following the latest earnings season, market speculators have altered their previously bearish stance.

The ratio of hedge funds buying European car manufacturers and parts compared to those selling has dwindled to a “multi-year low,” the note concluded.