It’s been a rough time for short sellers. Famed short-seller Jim Chanos recently shut down his fund after years of uneven performance and dwindling assets under management. The rallies in meme stocks, highly speculative tech firms and so on have caused hedge funds big losses on their short positions.

But there are still hedge fund stocks to short. The hedge funds haven’t given up; in fact, 2022 was a profitable year for many hedge fund short selling strategies. And the current macroeconomic headwinds could lead to another significant stock market correction. Here are three stocks that have seen heavy hedge fund short selling recently.

Tesla (TSLA)

It’s probably not a surprise that Elon Musk’s electric vehicle company remains a leading hedge fund target. Tesla (NASDAQ:TSLA) has become profitable and has shown itself to have a capable and viable business model.

That said, there is a still a great deal of skepticism around Tesla’s valuation. Tesla has a market cap of $750 billion while generating about $100 billion in annual revenues. By contrast, Toyota Motor (NYSE:TM) has a mere $250 billion market cap while bringing in nearly $300 billion in annual revenues.

For the past decade, Tesla has supported a massive valuation because it had the clear first-mover advantage in electric vehicles. But now, many of the world’s dominant automakers have attractive EV and hybrid vehicle offerings.

Meanwhile, the slowing economy appears to be hurting Tesla’s outlook. As our Joel Baglole recently noted, Tesla has been forced to slash prices, with their average vehicle costing about $10,000 less than they did last year. Musk’s purchase of the social media platform X has also angered some potential Tesla customers while raising concerns that his attention is too diluted by other matters besides Tesla.

All this points to this being a risky time to own TSLA stock with shares going for more than 60 times forward earnings.

Rivian (RIVN)

Hedge funds aren’t just skeptical of Tesla but rather the whole EV industry. Given the high levels of competition and challenging macroeconomic environment, there could be a substantial turmoil throughout the sector.

Rivian (NASDAQ:RIVN) is another EV stock that hedge funds have taken aim at. In fact, with short interest of more than 15% of the float, Rivian is one of the most heavily-shorted, larger capitalization companies on the Nasdaq.

Why the skepticism? Simply put, Rivian is intentionally selling its vehicles at a loss. Last quarter, Rivian spent $1.8 billion assembling vehicles which, in turn, only generated $1.3 billion of revenues. You have some issues when you start out at a negative 36% gross margin. Throw in Rivian’s massive expenses on overhead, marketing and R&D, and the company is absolutely incinerating cash which leads to questions about its ability to survive.

At some point, Rivian might be able to build a brand and raise prices. Or it could achieve economies of scale and lower production costs as it churns out more units. But with Tesla slashing prices, it’s hard to see how Rivian has a near-term path to profitability. Rivian lost more than $5 billion over the past 12 months, and it’s hard to keep up that sort of tsunami of red ink for long without having a share price crash.

Kering (PPRUY)

Kering (OTCMKTS:PPRUY) is a French luxury goods company. It is also a leading hedge fund short position in 2023. Kering, for those unfamiliar, owns prominent luxury goods brands including Gucci, Balenciaga, and Yves Saint Laurent among others.

Kering’s U.S. shares, under ticker PPRUY, soared from $40 in 2020 to as high as $90 in 2021 as sales boomed during the pandemic. All the stimulus money seemingly elevated spirits across much of the luxury industry, including Kering’s brands.

Now, as the economy has cooled down and inflation impacts consumers’ buying power, sales have headed back toward more traditional levels and the enthusiasm around these upscale firms has diminished. LVMH Moet Hennessy Louis Vuitton (OTCMKTS:LVMUY) is another luxury goods company that has become a top hedge fund short position this year on similar rational around consumer spending fatigue.

So far, these bets are paying off nicely. Kering shares, for example, have fallen more than 20% over the past 12 months. But hedge funds might be overstaying their welcome. PPRUY stock is now down to less than 17 times forward earnings, and that seems like a reasonable entry point for such world-class brands.

On the date of publication, Ian Bezek held a long position in LVMUY stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.