Gun Stocks Crumble in Sandy Hook Aftermath
“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,” wrote Cerberus Capital Management in a statement. In 2006, the firm made a significant investment in the Freedom Group, a collection of gun manufacturers (which includes Bushmaster) that sell firearms to licensed dealers and distributors. In the wake of the Newtown tragedy, the firm has decided to sell its investment.
“As a Firm, we are investors, not statesmen or policy makers,” they wrote. While the firm acknowledges that it is not their role to take a position, they do have an obligation to those who have money invested with them, such as the California State Teachers’ Retirement System. In the wake of Friday’s shooting, the group said it was reviewing its investment with Cerberus specifically because of its stake in the Freedom Group.
This review no doubt helped pressure Cerberus into making its decision, and the involvement of the teachers’ group has added fuel to a long-standing debate in the investment community. Activist investors are nothing new, but generally they fight for financial discipline or changes in management. This participation leaves the realm of business behind and enters a place where investors are asked to consider the morality of their investments.
Eliot Spitzer, formerly the governor of New York, articulates the idea in an article he wrote for Slate magazine…