Investors shun gunmakers,
MINNEAPOLIS — Investors shunned some of the nation’s largest gun makers Tuesday in the aftermath of the Connecticut school shooting, including making plans to sell the company that manufactures the Bushmaster semi-automatic rifle used in the bloody attack.
Stocks of other gun companies fell, and one sporting-goods chain said it would temporarily stop sales of military-style firearms. In Washington, some former opponents of gun control signaled that they may change their position, potentially giving stricter gun laws their best chance of passage in years.
The most notable rejection of the gun industry came when the private-equity firm Cerberus Capital Management announced it would sell the maker of the rifle used in the massacre, which it called a “watershed event.”
The shooting “raised the national debate on gun control to an unprecedented level,” Cerberus said in papers announcing the planned sale. “We are investors, not statesmen or policy makers.”
Bushmaster, Remington and DPMS are among the brands made by Freedom Group Inc., the largest firearms maker in the U.S.
The Madison, N.C., company sold 1.1 million rifles and shotguns last year, along with 2 billion rounds of ammunition. Its products are sold to law enforcement and military customers, as well as retailers who serve hunters and gun enthusiasts.
Cerberus, a large privateequity firm best known for investing in Chrysler and other troubled corporations, appears to have been under pressure from two sources: investors and the threat of more gun control.
Officials at California’s huge teacher pension fund said they were reviewing a $600 million investment in Cerberus in light of the Connecticut shooting.
Through its stake in Cerberus, the California State Teachers’ Retirement System owns a 2.4 percent stake in Freedom Group, according to the pension fund.
Fund spokesman Michael Sicilia confirmed the fund owns approximately $ 4 million in shares of Sturm Ruger & Co. and $1.7 million in shares of Smith and Wesson.
Freedom Group has lost money in four of the last five years, according to financial filings on its website. Revenue in 2011 was $775 million, down from $848.7 million in 2009. Slightly more than half of its 2011 revenue came from guns, much of the rest from ammunition.
Cerberus filed papers in 2009 to take Freedom Group public, but withdrew the bid in 2011 without saying why. A Cerberus spokesman declined to comment Tuesday beyond the company’s statement.
The assault weapons ban that expired in 2004 restricted the sale of some types of guns like those made by Bushmaster. The adoption of a similar law “could have a material adverse effect on our business,” Freedom Group noted in its announcement.
In 2010, Freedom Group said it would close its Bushmaster plant in Windham, Maine, and shift the work to a plant in Ilion, N.Y. At the time, New York Sen. Charles Schumer praised the move as a way to strengthen Remington’s ability to compete for Defense Department gun contracts.
Firms like Cerberus are basically privately run pools of money that invest in companies on behalf of pension funds. On Tuesday, the fund attempted to distance itself from the national debate.
“It is not our role to take positions, or attempt to shape or influence the gun control policy debate,” the firm said. “That is the job of our federal and state legislators.”