Hedge funds have shifted their focus toward European consumer discretionary stocks, particularly luxury goods, while betting against companies exposed to potential US tariffs, according to a report by Reuters citing a Goldman Sachs note released this week.
European stocks tied to non-essential consumer spending – such as luxury items, leisure, and household appliances – have garnered increased interest from hedge funds, signalling renewed optimism in these sectors.
However, companies with exposure to US President Donald Trump’s evolving tariff policies, such as Italian spirits maker Campari, have become popular short targets. According to a separate report by research firm Breakout Point, disclosed short positions in Campari recently hit an all-time high.
Campari, known for its Aperol and Espolon tequila brands, operates three production sites in Mexico and Canada, both of which are tariff-sensitive regions. The company’s latest sustainability report indicates that 27% of its US sales are tied to imports from these countries, Citi reported earlier this week.
Hedge funds including Citadel, Arrowstreet Capital, and Gladstone Capital are among those with disclosed short positions in Campari, according to filings with Italy’s market authority. While Citadel declined to comment, the other firms and Campari did not immediately respond to requests for comment.
The shift marks a departure from 2024, when luxury stocks were prime short targets for hedge funds. Since the start of the latest earnings season, hedge funds have adjusted their positions, becoming less bearish on European carmakers and parts manufacturers. The ratio of hedge funds buying versus selling these stocks has now dropped to a multi-year low, the Goldman Sachs report noted.
By contrast, activity in UK equities has remained relatively subdued.
