A customer shops Monday at a Tinley Park, Ill., gun store.(Photo: Scott Olson, Getty Images)
NEW YORK -- A major U.S. retailer that sells guns and a Wall Street
investment firm that owns a company that manufactures firearms both took
bold steps Tuesday to distance their brands from the intense anti-gun
backlash following the shooting massacre last Friday at a Connecticut
With the national debate to stop gun violence via
stricter gun laws gaining renewed urgency across the nation,
private-equity firm Cerberus Capital Management said it was working on
selling Freedom Group, a firearms company that it owns. One of the
rifles used in the assault at the Sandy Hook Elementary School shootings
that killed 26 people, including 20 children, were manufactured by
Bushmaster Firearms International, one of an assortment of gun brands
under the Freedom Group umbrella.
Also, the Dick's Sporting Goods
chain, which has more than 500 stores in 44 states, said that "out of
respect for the victims and their families" it was suspending the sale
of modern sporting rifles nationwide as well as halting gun sales and
displays in its store nearest to Newtown, Conn., where the shootings
occurred. In a statement, Wal-Mart, another retailer that sells guns at
its stores, said it had made "no change to the assortment of guns" it
sells, but that it has removed an informational page about the
Bushmaster .223 rifle on its website, but that it remains "dedicated to
the safe and responsible sale of firearms."
president of a public relations firm that promotes consumer products,
says retailers that sell guns are reacting quickly to do "what feels
right," adding that they have to be "more thoughtful about how they
approach these types of products."
The moves came on a day when
White House press secretary Jay Carney said President Obama was pushing
for a ban on assault weapons, more children killed in Newtown were laid
to rest and investors fled shares of other gun makers. Shares of Smith
& Wesson plunged 10% and Sturm Ruger lost almost 8% amid fears that
stiffer regulations would soon engulf the industry.
despite saying Monday that it was reviewing its investment in Cerberus
due to its position in Freedom Group, the California State Teachers'
Retirement System, the world's largest educator-only pension fund with
more than $154 billion in assets, said it would remain invested in the
investment fund after learning of Cerberus' plans to sell the firearms
The decision of CalSTRS not to invest its position in
Cerberus comes despite the fact that it has policies and a vetting
process that are supposed to take into account the "risks associated
with products that pose significant threats to human well-being" before
an investment is made. CalSTRS also said it was now reviewing all of its
gun-related investments, which include ownership of Smith & Wesson
in one of its passive portfolios that track a stock index.
forward, we will work to ensure that all of our investments are taking
these very important criteria into consideration," CalSTRS said in a
The Cerberus and CalSTRS connection also kicked off a
debate about the prudence of pension funds owning shares of companies
whose products are lethal and can cause death and bodily harm.
California State Treasurer Bill Lockyer said Tuesday he would like his
state's two largest pension funds to sell their investments in
gunmakers. The California Public Employees' Retirement Systems, or
CalPERS, also has a $400 million investment in Cerberus, according to
its most recent quarterly report of its private-equity holdings. CalPERS
did not return a call for comment.
In a statement, Cerberus said
it was "deeply saddened" by the killings and stressed that a key factor
in its decision to seek a sale of Freedom Group, which it has been
invested in since 2006, was to avoid being "drawn into the national
debate" about gun control.
The intense national spotlight on gun
control is forcing investors to rethink their investments in companies
that make firearms, says Gary Kaltbaum of money management firm Kaltbaum
& Associates. He says Cerberus' motivation to sell Freedom Group,
which sells brands including Remington and is the self-described largest
firearms maker in the U.S., was likely less about money and more about
wanting a fresh break from guns.
"I think it is as simple as
investors saying, 'I don't want to be associated with guns,' " says
Kaltbaum, adding that "There's no question that investments in gun
companies have gone down, and they are not very popular right now."
Anthony Sabino, a corporate litigator, says Cerberus' decision to sell the gunmaker was "more of a public relations move."
"Cerberus doesn't want this stake, whatever its size, showing up on its
reports to investors," says Sabino. "It's more to placate public
pension funds. Money is not the motivation here. Perception is."