DME Capital & Capri: A Curious Speculation

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Now, I’ve seen a good many things in my time on Wall Street – bubbles rise and burst, fortunes made and lost quicker than a gambler’s wink – but this here transaction with Capri Holdings, well, it’s a bit of a head-scratcher. DME Capital, a fund managed by folks who generally know which way the wind is blowin’, decided to load up on Capri shares come February of ’26. Not just a few, mind you – two million and eight thousand, four hundred and ten shares, to be precise. That’s a heap of handbags and fancy shoes, even for a firm that deals in such things.

They shelled out some $48.12 million for the privilege, and the whole shebang increased the value of their Capri holdings by another $62.80 million. That’s a considerable sum, and it suggests these fellas aren’t merely window-shopping. It’s like a fella suddenly deciding he needs a whole new wardrobe – there’s usually a reason for such extravagance.

Now, DME’s investment now accounts for 4.08% of their total assets. A goodly portion, that, and enough to make a man sit up and take notice. It’s moved Capri up to the seventh-largest holding in their portfolio. They had a bit of a fondness for GRBK, holdin’ $593.23 million of that stock, followed by FLR at $220.18 million. CNR, BHF, and GPK round out the top five. Seems they’re spreadin’ their bets, but Capri’s jumpin’ up the ranks is what’s caught my eye.

As of that February date, Capri shares were fetchin’ $20.38 apiece. A bit down in the dumps, actually – off 5.3% from a year prior, and laggin’ the S&P 500 by a full 21.2 percentage points. Seems the market’s been a bit skeptical, and for good reason, as you’ll see.

Capri Holdings, for those unacquainted, deals in the finer things – Versace, Jimmy Choo, Michael Kors. Luxury apparel, footwear, handbags, the sort of goods that appeal to those with more coin than sense, if you ask me. They sell direct to consumers, through fancy boutiques and online, and also wholesale to retailers. They’re aimin’ to capture the global appetite for all things posh, with a presence in North America, Europe, and Asia. A grand ambition, to be sure.

Here’s a look at the numbers, laid bare: revenue of $4.33 billion, but a net income of negative $504 million. A curious state of affairs, wouldn’t you say? And that price of $20.38, well, it reflects a bit of a struggle. A year ago, they were reachin’ for $28.27, but those tariffs, they’ve been a bother.

Now, there’s been some talk of the Supreme Court givin’ a portion of those Trump-era tariffs the boot, and that could provide a bit of a lift to Capri’s margins. A welcome development, to be sure. But here’s the rub: sales are declinin’. In their third quarter, revenue dropped 4% year-over-year. They’re expectin’ a total of $3.5 billion in sales for the year, down from $4.4 billion the year before. A considerable slide, and one that gives a man pause.

So, what does all this mean for us investors? Well, DME Capital’s move suggests they see something others don’t. They’re bettin’ on a turnaround, perhaps anticipatin’ that tariff relief will boost profits. But I’d advise a bit of caution. Capri’s got its challenges, and those declinin’ sales are a worrisome sign. I’d suggest keepin’ a watchful eye on their performance over the next few quarters before jumpin’ in. Sometimes, the most fashionable investment is the one you don’t make.

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2026-02-25 22:54