tangent4ronpaul
01-28-2013, 11:30 AM
Obama, possibly through a EO or pressure on the council of mayors is dictating that states and municipalities dump gun stocks in pension funds and any other state owned investments... details are foggy - just half heard that it's another tactic the administration is using to kill guns by going after the manufacturers.
Anyone know more?
Pensions Dump Gun Stocks: Can They Make a Difference?
http://www.thefiscaltimes.com/Articles/2013/01/23/Pensions-Dump-Gun-Stocks-Can-They-Make-a-Difference.aspx#page1
Since the Dec. 14 shooting at Sandy Hook elementary school, public pension officials in California, New York, Connecticut, Rhode Island and Massachusetts, as well as the private equity fund, Cerberus Capital Management, have said they are either reviewing or will begin selling their firearms investments. Cerberus owned the Freedom Group, which makes the Bushmaster rifle used in the shootings.
But are such divestments likely to have any impact on the gun industry, which despite the shooting, racked up $11.7 billion in sales last year?
One historical example that may give insight into the effects of pension fund divestment is the tobacco industry in the mid-1990s.
A $35 billion industry at the time, tobacco faced a public relations nightmare after whistleblower Jeffrey Wigand, the former vice president of research and development at Brown & Williamson, exposed the company’s efforts to deceive the public of cigarette’s dangers on 60 Minutes.
Amidst the controversy, public pension funds began pulling their money out of tobacco stocks. Between March of 1996 and October of 2000, more than 16 major public pension funds sold or put restrictions on their tobacco investments. The largest, according to the Council for Responsible Public Investment (CRPI), was the Florida State Retirement Trust Fund, which in 1997 sold $835 million of tobacco securities. The California Public Employees’ Retirement System (CalPERS) sold all of its tobacco holdings, valued at about $525 million. The California State Teachers’ Retirement System (CalSTRS) sold just its passively held tobacco investments, which amounted to about $238 million.
Others included the New York State Common Retirement Fund, the New York State Teachers’ Retirement System, The Vermont State Retirement System, the Minnesota State Board of Investment, the Maryland Retirement and Pension System, and the Massachusetts’ Public Retirement Investment Management Trust, which divested about $268 million of its holdings in 1997 as a result of state legislation. By the end, some $2.6 billion worth of tobacco stocks were divested or frozen, according to the CRPI.
Yet, the tobacco industry has since rebounded, bringing in $45 billion last year. In the end, the bigger financial threat to the industry was not divestment but the impending liability faced by the four largest tobacco companies in the U.S. -- Philip Morris Inc., R. J. Reynolds, Brown & Williamson and Lorillard -- after attorneys general in 46 states filed lawsuits claiming they suffered tobacco-related medical costs. In November 1998, the companies entered into a master settlement and agreed to pay $206 billion to various states over the next twenty-five years. In return, they were exempted from private tort liability involving harm caused by cigarette use.
Once the settlement was reached and the financial uncertainty was removed, the industry began to flourish again and some pension funds moved back in. Altria, formerly named Philip Morris USA and the biggest US tobacco company of the bunch, for instance, was number 9 on the Fortune 500, in terms of profits, just two years after the settlement. In 2001, it was number 7. That same year, over opposition from anti-smoking groups, Florida officials ended the state’s ban on tobacco investing. Pension officials saw tobacco stocks go through the roof, and reportedly said it was too lucrative a proposition for the $100 million pension fund to ignore.
Public pension divestment is likely to have even less of an impact on the $11.7 billion gun industry, where public pension funds hold far less stock because only three gun companies trade publicly.
And unlike tobacco firms, the publicly-traded gun companies are very small. They are also very profitable. They don’t need institutional money for capital expenditures or economic stability, said James McDonald, Chief Investment Officer at Index Strategy Advisors in Houston.
“If a significant portion of the market decided they wanted to divest, and I mean a significant portion, then the stock price might go down. But how long will that persist?” said Julie Gorte, Senior Vice President for Sustainable Investing at Pax World Management LLC.
As of Jan. 17, 89 percent of the stock of Sturm, Ruger& Co., for instance, was held by 176 Funds and Institutions, few of which were public pension funds, according to Yahoo! Finance. And yet the company has flourished: its stock price was up 35 percent in 2012, outperforming the S&P, which was up just 12.6 percent during the same period. And its revenue continues to rise, hitting $443 million in 2012, up from $328 million in 2011, and $255 million in 2010.
Sturm also pays an above average 3.6 percent dividend, which represents a 34 percent payout ratio. If gun stocks are anything like tobacco stocks, the allure of profits may be hard to resist.
“The firm is rewarding its investors more than the other way around. This company can continue to operate profitably without any public pension investment,” McDonald said.
Sturm rival Smith & Wesson’s stock was also up, a whopping 88 percent in the last year.
But performance aside, the company’s capital requirements are small and could probably be financed by a small private equity firm controlled by a handful of partners without much effort, McDonald said. Their small size means they aren’t dependent on large, diverse investor bases. In a word, pension divestment won’t change the gun industry because the gun industry doesn’t need their money. And Ruger and Smith & Wesson’s main competitors, Browning Arms Company, Remington Arms Company, and Colt’s Manufacturing, are private and simply don’t bother with institutional public ownership.
“Based on my research, and if tobacco’s history is any indicator, pension divestment will have virtually zero impact on the gun industry. Public pension investments simply aren't of much importance to gun firms,” said McDonald. “There is plenty of investment capital to be found elsewhere for gun firms, and the publicly traded gun firms are too small to matter to the pension's portfolio performance. Neither will miss the other’s absence.”
Gun Stocks Drop Because 'This Time It’s Different' (Dec 18)
http://www.thefiscaltimes.com/Columns/2012/12/18/Stock-Market-Signals-Worries-Ahead-for-Gun-Stocks.aspx#page1
Maybe it really is different this time. The level of outrage at the latest mass shooting has a different, more intense tone to it. Perhaps that’s because of the victims – particularly the 20 six- and seven-year-olds and six of their teachers. Or the timing. Or the fact that this is the seventh attack of its kind this year alone.
Perhaps even the location, a school, which underscores the increasing sense of vulnerability felt by Americans simply trying to go about their ordinary lives, and which joins a list from recent years as long and varied as an IHOP restaurant, a college campus, a movie theater, a beauty salon, a church, a Sikh temple and a meet-and-greet session with a member of Congress on an Arizona street corner.
Another very convincing sign that it's different this time is the fact that Cerberus Capital, a private equity company, announced that will immediately take steps to sell its stake in Freedom Group, a gun and ammunition manufacturer. Although the company says that "it is not our role to take positions, or attempt to shape or influence the gun control policy debate," the mere fact that it has responded to events by taking such dramatic action is telling. Either Cerberus believes that its investors no longer will accept earnings from gun manufacturers, fears that regulations will wreak havoc on the business or worries that its stake in Freedom will damage its own public image beyond repair. Clearly, however, this isn't a purely commercial decision. While declaring that it doesn't believe Freedom has any liability in terms of how it sells the weapons it manufactures (they are sold to dealers; Cerberus makes it clear that it doesn't believe any single company can prevent such tragedies), the private equity investment firm added that "it is apparent that the Sandy Hook tragedy was a watershed event that has raised the national debate on gun control to an unprecedented level."
The differences this time have also extended to publicly traded gun companies. When I wrote about gun stocks in the wake of the Aurora, Colorado movie theater shooting in July, both Smith & Wesson Holding Corp. (NASDAQ: SWHC) and Sturm, Ruger & Co. (NYSE: RGR) had seen their share prices gain ground since the massacre. Sturm Ruger’s shares gained 2.7 percent in the days following that attack, to trade at about $43.72. Smith & Wesson, meanwhile, rose somewhat more modestly to about $9.65 a share. Both went on to post further gains over the summer before hitting their 52-week peaks or coming close to them in the early days of December. At that point, the two gun manufacturers clearly ranked among the best-performing stocks for the year, with Sturm Ruger having risen about 136 percent and Smith & Wesson recording a gain of 71.6 percent, compared to an 11 percent advance for the S&P 500.
After the Newtown shootings, investors might have anticipated another “Obama Factor” boom as gun owners added to their arsenals ahead of a potential crackdown. Or they might have bid up the gunmakers after surveying the political landscape and concluding there was no reason to believe that any real crackdown would come.
Instead, both stocks fell, and have continued to fall. As of this writing, Sturm Ruger has lost 7.8 percent, while Smith & Wesson is down 9.3 percent. In July, despite the flurry of shootings that culminated in the rampage within the Colorado movie theater, the market seemed to ascribe little probability to the prospect of that tragedy providing a political impetus for tougher gun laws. This time, either market participants believe that the Newton, Connecticut murders will cause a drop in demand for weapons or that there is a long-term and serious threat to the gun manufacturing business as it exists today. This time, the market clearly believes that something is different, and it goes beyond the political rhetoric.
Even that rhetoric has become more pointed, though, with President Obama – no longer fighting for re-election – pledging to use “whatever power this office holds” to prevent further such tragedies. Some pro-gun legislators, like Democratic Sen. Joe Manchin of West Virginia, have shown signs of being willing to debate the issue. And in another sign that it’s different this time, the National Rifle Association took down its Facebook page over the weekend, after announcing the day before the Newton shooting that it had 1.7 million “likes,” and urging fans to “keep the momentum going.”
Those wanting to own guns may still respond to President Obama’s call for measures to reduce gun violence by acquiring more weapons before any changes to the laws makes doing so more difficult. In the short run, that may cause another boost in the gun manufacturers’ order backlogs of the kind that helped ignite their recent big market rally. That would be good news for Smith & Wesson, which recently disclosed to investors that while demand by dealers for its handguns was still higher than it was a year ago at this time, it had fallen over the third quarter. At least, it may be good news for the company’s profits, and for those at Sturm Ruger.
But this time, investors appear to be looking past any short-term upside and into the middle distance, and seeing a new kind of business environment emerge for them and for companies like Alliant Techsystems (NYSE: ATK), which makes ammunition for individual gun owners, among its other businesses. Alliant’s stock price has held up well in the wake of the shootings, possibly because it is primarily a defense contractor that also supplies ammunition to police forces; the impact of its lower-margin non-military sales of ammunition is muted when set beside revenues from missile systems.
Financial markets are a relatively unbiased way to gauge what pragmatic, profit-oriented people expect to happen to a company next. They’re far from infallible, of course, and in times of panic can become distorted and begin sending unreliable signals. Still, the fact that the two publicly-traded gun manufacturers in the United States saw their shares decline for a second day running – after investors had a weekend to digest the news and the emotion associated with it – is a signal that the markets, too, believe something has changed.
These are all early readings, however. Outraged presidents have vowed “never again” in the wake of mass murders – remember Columbine? The murders on the Long Island Rail Road? They wound up reluctant to deploy their political capital by pushing for significant reforms. And, as I noted back in the summer, trying to push through effective new laws would make the debate over Obamacare look like a walk in the park.
For the coming weeks and months, until it becomes clear whether this is just a more intense and acute response to these all-too-frequent bouts of gun violence that have claimed the lives of all too many American citizens in recent decades, gun manufacturing stocks are likely to remain under pressure. As the nation’s mood has shifted dramatically to one extreme, it won’t be until the emotion dissipates that we’ll be able to judge what lies ahead for Sturm Ruger and Smith & Wesson. And even then, last week’s tragedy has made owning them a higher-risk proposition.
Ruger NYSE: RGR
Smith & Wesson wholly owned by Saf-T-Hammer Corp. (OTC BB: SAFH.OB)
Heckler & Koch wholly owned by British Aerospace
Colt private investor group headed by an anti-gun nut
Taurus (ownership unknown)
Beretta privately owned? by Ugo Gussalli Beretta & his two sons
SigArms Formerly owned by SIG Swiss Industrial Company Holding Ltd., not sure who owns it now
American Derringer Corp. don't know
Glock headed by Gaston Glock but don't know if privately owned or not
Anyone know ticker symbols for ammo manufacturers?
-t
Anyone know more?
Pensions Dump Gun Stocks: Can They Make a Difference?
http://www.thefiscaltimes.com/Articles/2013/01/23/Pensions-Dump-Gun-Stocks-Can-They-Make-a-Difference.aspx#page1
Since the Dec. 14 shooting at Sandy Hook elementary school, public pension officials in California, New York, Connecticut, Rhode Island and Massachusetts, as well as the private equity fund, Cerberus Capital Management, have said they are either reviewing or will begin selling their firearms investments. Cerberus owned the Freedom Group, which makes the Bushmaster rifle used in the shootings.
But are such divestments likely to have any impact on the gun industry, which despite the shooting, racked up $11.7 billion in sales last year?
One historical example that may give insight into the effects of pension fund divestment is the tobacco industry in the mid-1990s.
A $35 billion industry at the time, tobacco faced a public relations nightmare after whistleblower Jeffrey Wigand, the former vice president of research and development at Brown & Williamson, exposed the company’s efforts to deceive the public of cigarette’s dangers on 60 Minutes.
Amidst the controversy, public pension funds began pulling their money out of tobacco stocks. Between March of 1996 and October of 2000, more than 16 major public pension funds sold or put restrictions on their tobacco investments. The largest, according to the Council for Responsible Public Investment (CRPI), was the Florida State Retirement Trust Fund, which in 1997 sold $835 million of tobacco securities. The California Public Employees’ Retirement System (CalPERS) sold all of its tobacco holdings, valued at about $525 million. The California State Teachers’ Retirement System (CalSTRS) sold just its passively held tobacco investments, which amounted to about $238 million.
Others included the New York State Common Retirement Fund, the New York State Teachers’ Retirement System, The Vermont State Retirement System, the Minnesota State Board of Investment, the Maryland Retirement and Pension System, and the Massachusetts’ Public Retirement Investment Management Trust, which divested about $268 million of its holdings in 1997 as a result of state legislation. By the end, some $2.6 billion worth of tobacco stocks were divested or frozen, according to the CRPI.
Yet, the tobacco industry has since rebounded, bringing in $45 billion last year. In the end, the bigger financial threat to the industry was not divestment but the impending liability faced by the four largest tobacco companies in the U.S. -- Philip Morris Inc., R. J. Reynolds, Brown & Williamson and Lorillard -- after attorneys general in 46 states filed lawsuits claiming they suffered tobacco-related medical costs. In November 1998, the companies entered into a master settlement and agreed to pay $206 billion to various states over the next twenty-five years. In return, they were exempted from private tort liability involving harm caused by cigarette use.
Once the settlement was reached and the financial uncertainty was removed, the industry began to flourish again and some pension funds moved back in. Altria, formerly named Philip Morris USA and the biggest US tobacco company of the bunch, for instance, was number 9 on the Fortune 500, in terms of profits, just two years after the settlement. In 2001, it was number 7. That same year, over opposition from anti-smoking groups, Florida officials ended the state’s ban on tobacco investing. Pension officials saw tobacco stocks go through the roof, and reportedly said it was too lucrative a proposition for the $100 million pension fund to ignore.
Public pension divestment is likely to have even less of an impact on the $11.7 billion gun industry, where public pension funds hold far less stock because only three gun companies trade publicly.
And unlike tobacco firms, the publicly-traded gun companies are very small. They are also very profitable. They don’t need institutional money for capital expenditures or economic stability, said James McDonald, Chief Investment Officer at Index Strategy Advisors in Houston.
“If a significant portion of the market decided they wanted to divest, and I mean a significant portion, then the stock price might go down. But how long will that persist?” said Julie Gorte, Senior Vice President for Sustainable Investing at Pax World Management LLC.
As of Jan. 17, 89 percent of the stock of Sturm, Ruger& Co., for instance, was held by 176 Funds and Institutions, few of which were public pension funds, according to Yahoo! Finance. And yet the company has flourished: its stock price was up 35 percent in 2012, outperforming the S&P, which was up just 12.6 percent during the same period. And its revenue continues to rise, hitting $443 million in 2012, up from $328 million in 2011, and $255 million in 2010.
Sturm also pays an above average 3.6 percent dividend, which represents a 34 percent payout ratio. If gun stocks are anything like tobacco stocks, the allure of profits may be hard to resist.
“The firm is rewarding its investors more than the other way around. This company can continue to operate profitably without any public pension investment,” McDonald said.
Sturm rival Smith & Wesson’s stock was also up, a whopping 88 percent in the last year.
But performance aside, the company’s capital requirements are small and could probably be financed by a small private equity firm controlled by a handful of partners without much effort, McDonald said. Their small size means they aren’t dependent on large, diverse investor bases. In a word, pension divestment won’t change the gun industry because the gun industry doesn’t need their money. And Ruger and Smith & Wesson’s main competitors, Browning Arms Company, Remington Arms Company, and Colt’s Manufacturing, are private and simply don’t bother with institutional public ownership.
“Based on my research, and if tobacco’s history is any indicator, pension divestment will have virtually zero impact on the gun industry. Public pension investments simply aren't of much importance to gun firms,” said McDonald. “There is plenty of investment capital to be found elsewhere for gun firms, and the publicly traded gun firms are too small to matter to the pension's portfolio performance. Neither will miss the other’s absence.”
Gun Stocks Drop Because 'This Time It’s Different' (Dec 18)
http://www.thefiscaltimes.com/Columns/2012/12/18/Stock-Market-Signals-Worries-Ahead-for-Gun-Stocks.aspx#page1
Maybe it really is different this time. The level of outrage at the latest mass shooting has a different, more intense tone to it. Perhaps that’s because of the victims – particularly the 20 six- and seven-year-olds and six of their teachers. Or the timing. Or the fact that this is the seventh attack of its kind this year alone.
Perhaps even the location, a school, which underscores the increasing sense of vulnerability felt by Americans simply trying to go about their ordinary lives, and which joins a list from recent years as long and varied as an IHOP restaurant, a college campus, a movie theater, a beauty salon, a church, a Sikh temple and a meet-and-greet session with a member of Congress on an Arizona street corner.
Another very convincing sign that it's different this time is the fact that Cerberus Capital, a private equity company, announced that will immediately take steps to sell its stake in Freedom Group, a gun and ammunition manufacturer. Although the company says that "it is not our role to take positions, or attempt to shape or influence the gun control policy debate," the mere fact that it has responded to events by taking such dramatic action is telling. Either Cerberus believes that its investors no longer will accept earnings from gun manufacturers, fears that regulations will wreak havoc on the business or worries that its stake in Freedom will damage its own public image beyond repair. Clearly, however, this isn't a purely commercial decision. While declaring that it doesn't believe Freedom has any liability in terms of how it sells the weapons it manufactures (they are sold to dealers; Cerberus makes it clear that it doesn't believe any single company can prevent such tragedies), the private equity investment firm added that "it is apparent that the Sandy Hook tragedy was a watershed event that has raised the national debate on gun control to an unprecedented level."
The differences this time have also extended to publicly traded gun companies. When I wrote about gun stocks in the wake of the Aurora, Colorado movie theater shooting in July, both Smith & Wesson Holding Corp. (NASDAQ: SWHC) and Sturm, Ruger & Co. (NYSE: RGR) had seen their share prices gain ground since the massacre. Sturm Ruger’s shares gained 2.7 percent in the days following that attack, to trade at about $43.72. Smith & Wesson, meanwhile, rose somewhat more modestly to about $9.65 a share. Both went on to post further gains over the summer before hitting their 52-week peaks or coming close to them in the early days of December. At that point, the two gun manufacturers clearly ranked among the best-performing stocks for the year, with Sturm Ruger having risen about 136 percent and Smith & Wesson recording a gain of 71.6 percent, compared to an 11 percent advance for the S&P 500.
After the Newtown shootings, investors might have anticipated another “Obama Factor” boom as gun owners added to their arsenals ahead of a potential crackdown. Or they might have bid up the gunmakers after surveying the political landscape and concluding there was no reason to believe that any real crackdown would come.
Instead, both stocks fell, and have continued to fall. As of this writing, Sturm Ruger has lost 7.8 percent, while Smith & Wesson is down 9.3 percent. In July, despite the flurry of shootings that culminated in the rampage within the Colorado movie theater, the market seemed to ascribe little probability to the prospect of that tragedy providing a political impetus for tougher gun laws. This time, either market participants believe that the Newton, Connecticut murders will cause a drop in demand for weapons or that there is a long-term and serious threat to the gun manufacturing business as it exists today. This time, the market clearly believes that something is different, and it goes beyond the political rhetoric.
Even that rhetoric has become more pointed, though, with President Obama – no longer fighting for re-election – pledging to use “whatever power this office holds” to prevent further such tragedies. Some pro-gun legislators, like Democratic Sen. Joe Manchin of West Virginia, have shown signs of being willing to debate the issue. And in another sign that it’s different this time, the National Rifle Association took down its Facebook page over the weekend, after announcing the day before the Newton shooting that it had 1.7 million “likes,” and urging fans to “keep the momentum going.”
Those wanting to own guns may still respond to President Obama’s call for measures to reduce gun violence by acquiring more weapons before any changes to the laws makes doing so more difficult. In the short run, that may cause another boost in the gun manufacturers’ order backlogs of the kind that helped ignite their recent big market rally. That would be good news for Smith & Wesson, which recently disclosed to investors that while demand by dealers for its handguns was still higher than it was a year ago at this time, it had fallen over the third quarter. At least, it may be good news for the company’s profits, and for those at Sturm Ruger.
But this time, investors appear to be looking past any short-term upside and into the middle distance, and seeing a new kind of business environment emerge for them and for companies like Alliant Techsystems (NYSE: ATK), which makes ammunition for individual gun owners, among its other businesses. Alliant’s stock price has held up well in the wake of the shootings, possibly because it is primarily a defense contractor that also supplies ammunition to police forces; the impact of its lower-margin non-military sales of ammunition is muted when set beside revenues from missile systems.
Financial markets are a relatively unbiased way to gauge what pragmatic, profit-oriented people expect to happen to a company next. They’re far from infallible, of course, and in times of panic can become distorted and begin sending unreliable signals. Still, the fact that the two publicly-traded gun manufacturers in the United States saw their shares decline for a second day running – after investors had a weekend to digest the news and the emotion associated with it – is a signal that the markets, too, believe something has changed.
These are all early readings, however. Outraged presidents have vowed “never again” in the wake of mass murders – remember Columbine? The murders on the Long Island Rail Road? They wound up reluctant to deploy their political capital by pushing for significant reforms. And, as I noted back in the summer, trying to push through effective new laws would make the debate over Obamacare look like a walk in the park.
For the coming weeks and months, until it becomes clear whether this is just a more intense and acute response to these all-too-frequent bouts of gun violence that have claimed the lives of all too many American citizens in recent decades, gun manufacturing stocks are likely to remain under pressure. As the nation’s mood has shifted dramatically to one extreme, it won’t be until the emotion dissipates that we’ll be able to judge what lies ahead for Sturm Ruger and Smith & Wesson. And even then, last week’s tragedy has made owning them a higher-risk proposition.
Ruger NYSE: RGR
Smith & Wesson wholly owned by Saf-T-Hammer Corp. (OTC BB: SAFH.OB)
Heckler & Koch wholly owned by British Aerospace
Colt private investor group headed by an anti-gun nut
Taurus (ownership unknown)
Beretta privately owned? by Ugo Gussalli Beretta & his two sons
SigArms Formerly owned by SIG Swiss Industrial Company Holding Ltd., not sure who owns it now
American Derringer Corp. don't know
Glock headed by Gaston Glock but don't know if privately owned or not
Anyone know ticker symbols for ammo manufacturers?
-t