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One of our preferred shorts (TAP) is up over 1% today – SABMiller reported STRs (shipment to retailers) of (1.1%) for the 4th quarter and STWs (shipments to wholesalers) of (-1.4%) for the MillerCoors JV in which both TAP and SAB participate - both results likely ahead of admittedly modest expectations.


The result represents sequential improvement from Q3 where STRs declined 2.4%.

Before investors break out the champagne (or beer), some context is needed – Q4 is the easiest STR comp of the year for MillerCoors, lapping a down 3.3% in Q4 2011.  Further, the spread between STR’s and STW’s (30 bps) indicates that only a small bit of the build-up in distributor stocks was worked through this quarter – STRs declined more than STWs by 70 bps in Q1 and 170 bps in Q2, corrected by 20 bps in Q3 and 30 bps in Q4.

Bottom line, the incremental information today isn’t enough to shake us off our short thesis, but was apparently enough to shake out some weak shorts.

Being early on shorts is painful, we get it – and while we recognize TAP is inexpensive, and shorting inexpensive names isn’t our go to move, we are sticking with our “cheap, for some very good reasons” meme that we have been running with on TAP.


Call with questions.




Robert  Campagnino

Managing Director