LONDON, Jan 23 (Reuters) - Hedge funds have turned

optimistic about European companies that sell things people want

but don't necessarily need, especially luxury goods, according

to a Goldman Sachs ( GS ) note on Wednesday seen by Reuters on

Thursday.

Consumer discretionary stocks in Europe like household

appliances, luxury items and leisure have sparked renewed buying

interest in hedge funds.

However, they have sold short those stocks exposed to U.S.

President Donald Trump's potential tariffs, the note said.

"As the tariff landscape evolves, hedge funds have

increasingly shorted tariff-exposed names," the note said.

Disclosed short positions in Italian spirits group Campari

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 Espolon brand, and one in Canada

that produces local whisky brand Forty Creek, according to its

latest sustainability report.

According to Citi, Campari imports 27% of its U.S. sales

from Mexico and Canada, 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 markets

authority showed.

Citadel declined to comment. Arrowstreet Capital, Gladstone

Capital and Campari did not immediately respond for a request

for comment.

A trader shorts an asset expecting its value to fall.

Most of this activity since mid-December has focused on

stocks in Europe, whereas activity in UK equities remained

relatively muted, the note said.

In 2024, luxury was a prime short target for hedge funds.

But since this most recent earnings season kicked off,

speculators have changed their bearish tune.

The number of hedge funds buying makers of European cars and

car parts compared to those who are selling has shrunk to a

"multi-year low," the note said.