BF.B Deal Falls Apart — and JP Morgan Piles On

Short interest positioning has been moving in an unusual direction given the news backdrop. At 9.9% of the free float, the headline SI figure is meaningfully elevated — but the more striking datapoint is the pace at which it has been unwinding. Shares short fell roughly 15% on the week and 37% over the past month. In mid-April the position was closer to 48 million shares shorted; by April 28 it had fallen to 30 million. That collapse in short positioning coincided almost exactly with the window when Pernod speculation was in full flow — a classic case of shorts covering into M&A rumours. With the deal now dead, it remains to be seen whether that covering reverses. The ORTEX short score of 61.8 — down from a peak of 65.7 earlier in April — reflects the recent easing, but still ranks in the 8th percentile for lowest short score rank among its peers, flagging residual bearish positioning relative to the universe. The lending market is not under pressure: cost to borrow is negligible at 0.57%, and availability remains generous, so rebuilding a short position carries minimal friction.

Options traders had already been rotating more defensively before the deal news arrived. The put/call ratio rose to 0.75, well above its 20-day average of 0.59, with a z-score of 1.3. That shift started around April 20 — the PCR jumped from roughly 0.50 to 0.76 over a few sessions. That looks now like prescient hedging ahead of the Pernod announcement, with the 52-week range for the PCR running from 0.33 to 1.57, meaning there is still room for the defensive skew to push further. Peer beverages names fared better on the week: TAP fell only 2.4%, STZ dropped 1%, and KDP actually gained 8.9%. Brown-Forman underperformed its closest comparables — the gap partly reflecting the deal-premium unwind specific to BF.B.

One factor that sits awkwardly against the bearish flow is the company's dividend score, which ranks in the 99th percentile. A 12-month forward yield of 3.38% provides some income cushion at current prices. The EV/EBITDA multiple of 12.7x has been drifting higher over the past 30 days as earnings estimates remain under pressure. EPS momentum over the last 30 days ranks in the 35th percentile — soft, but not catastrophic — while the 90-day reading at 70 is more constructive. The next earnings date is June 3, when Q3 results will determine whether the fundamental deterioration narrative that drove the stock from the low $30s to $27 has stabilised.

The next focal point for BF.B is the Q3 print on June 3. Two prior quarterly reports each produced single-day declines of 4–7% and five-day losses exceeding 12%. Whether the deal-premium collapse has reset expectations low enough to provide cover is the question that will define trading into that event.