Hedge Funds Bet on European Consumer Discretionary Stocks, Shorting Tariff-Exposed Names
European companies providing non-essential goods, particularly luxury items, are attracting increasing optimism from hedge funds, as per a Goldman Sachs report obtained by Reuters.
Consumer discretionary stocks in Europe, including home appliances, luxury goods, and leisure, have generated renewed buying interest among hedge funds.
Conversely, funds have taken short positions in stocks potentially affected by U.S. tariffs, the report states. "As the tariff landscape evolves, hedge funds have increasingly shorted tariff-exposed names," it notes.
Disclosed short positions in Campari, the Italian spirits conglomerate, have reached an all-time high, according to a separate report by Breakout Point. Campari operates production sites in Mexico and Canada, importing a significant portion of its U.S. sales from these countries.
Hedge funds with disclosed positions in Campari include Citadel, Arrowstreet Capital, and Gladstone Capital, as per a regulatory filing by Italian market authorities.
Short selling involves expecting an asset's value to decline. This activity has primarily targeted European stocks since December, while UK equity activity remains subdued, the Goldman Sachs report indicates.
Luxury stocks were a prime short target for hedge funds in 2024. However, the sentiment has shifted since the recent earnings season, with the number of funds buying European automakers and parts suppliers compared to sellers shrinking to a "multi-year low."