"The Bears are lowering their bets against the owner of Gucci. Is it worth buying his shares?

Hedge funds that bet on the fall in shares of Kering, which owns Gucci and other luxury brands, are gradually winding down their positions, CNBC notes. Shorts have shrunk from more than 10% of all securities outstanding to 8%. This reversal coincided with the arrival of new CEO Luca de Meo, with whom hopes are pinned for a revival of a group facing a sales crisis. Analysts are also gradually becoming more optimistic about the luxury holding, but there are those who remain skeptical.

Hedge funds are cutting short positions in shares of Kering, whose portfolio includes Gucci, Saint Laurent, Balenciaga and Alexander McQueen. Interest in shorts is waning as the troubled luxury holding company tries to regain ground under new CEO Luca de Meo after years of turmoil, CNBC writes.

The share of freely traded shares used in short sales has fallen from above 10% in the summer to 8% in September, according to estimates by analyst firm Ortex cited by Reuters. Short-sellers capitalize on a company's falling value by borrowing its shares to sell on the open market and then buying them back at a lower price.

Last month, Kering was the most "overweight" shorted stock among European large-cap companies, according to Hazeltree analysis, which tracks shorts on 15,000 public companies in a database of 700 hedge funds. One of the U.K.'s largest hedge funds, Marshall Wace, held a net short position of 1.6 percent of Kering shares as of July 16, while on Sept. 16 that stake was already 0.67 percent, according to information on ShortRegister, a portal compiled from regulatory filings.

Kering shares fell 1% in trading in France on Sept. 22, but the company's value has jumped more than 50% in the past three months and is approaching its highest since the beginning of the year, CNBC notes. By this point, quotes have risen for 2025 by about 11%.

Kering's new head Luca de Meo, brought in from Renault and taking up his post on September 15, has been tasked with resuscitating the company, which has faced pressure from U.S. duties and declining demand for luxury goods in key markets, including China. Kering's second quarter earnings disappointed investors, with the group reporting a 15% year-on-year drop in sales and in particular a sharp 25% drop in sales of its flagship Gucci brand. In addition to Gucci's weak results, the luxury holding company cited a €9.5 billion debt load as one of its main problems. As a result, Kering's problems have made it a regular target for downside hedge funds, which have capitalized on the company's falling value.

In addition to the financial difficulties, the company confirmed last week that it had identified a data breach resulting from "temporary access by an unauthorized third party." Customer names, addresses and spending information from stores around the world were stolen, but credit card data was not compromised as a result of the hack, the holding company emphasized.

On September 16, analysts at CIC Market Solutions upgraded their recommendation on Kering shares from "neutral" to "buy" and raised their target price from €220 to €300. Their new target implies a 12% growth of quotations.

"The bullish view was confirmed by HSBC, which last week maintained its "buy" recommendation and €300 target price. The bank believes that Luca de Meo is capable of energizing the group and changing the corporate culture by revamping the teams, following the example of Apple founder Steve Jobs, who said he hired smart people to tell him what to do, not the other way around. Pessimism about Kering on the stock market will gradually go away thanks to a series of positive news that will help restore investor confidence, the investment bank predicts.

Nevertheless, Kering will probably have to reconsider the composition of its brand portfolio - including jewelry and cosmetics businesses, as well as weak divisions, HSBC analysts said. Among other things, they suggested, there may be a possible restructuring of the assets of Artemis Holding, which includes Puma, wineries and Christie's auction house.

Analysts who look at Kering's prospects with skepticism, so far there are also enough. The company AlphaValue on September 17 confirmed the "bearish" forecast, slightly improving the rating of shares of luxury holding from "sell" (Sell) to "reduce the position" (Reduce). The analysts left the target price unchanged at €279, which implies a slight upside of 5%. The AlphaValue team noted the active steps taken by Luca de Meo on his first day as CEO - personnel changes at Gucci, the transfer of the Valentino eyewear business to Kering Eyewear. All of this reinforces expectations of a recovery from fiscal 2026, analysts predicted.

A cautious stance is taken by RBC and Bernstein, for example - they reiterated neutral ratings last week, with Bernstein's target of €180 implying a 33% downside risk to the stock.

In total, Kering now has seven buy recommendations - two more than a month ago, FactSet shows . At the same time, most of the ratings are neutral, equivalent to the advice to keep the securities in the portfolio. There are 13 of them. There are six analysts who are set to sell the luxury holding's shares - their number has not changed. The average target price of €215 euros implies a fall in quotations by almost 20% from the level of the last closing on September 19.

This article was AI-translated and verified by a human editor