The public outcry over the December 14 shooting at a middle school in Newtown, CT has touched off a national conversation about gun control legislation. That conversation and the critique of America’s loose public gun policy is likely to grow in volume throughout 2013. However, the economic impact on publicly-listed gun and ammunition manufacturers has been next to nil.
As the chart down below shows, the shares prices of Sturm Ruger & Co. (RGR), Smith & Wesson (SWHC) and Alliant Techsystems (ATK) have rebounded from dips following the massacre at Sandy Hook Elementary School that police say involved a Bushmaster .223 assault rifle. In fact, gun sales in Connecticut and Virginia have picked up since the incident on worries about more restrictive gun legislation.
True, the shocking event did prompt private equity fund Cerberus Management Capital to announce plans to sell its stake in the Freedom Group, the gun manufacturer that makes the Bushmaster. But make no mistake: Making and selling guns likely will remain a big and profitable business in the U.S. for many years to come. The US firearms business generates about $31.8 billion annually according to the National Shooting Sports Foundation, and there are about 310 million firearms circulating around America, according to this informative piece on the scale of the industry.
The investments discussed are held in client accounts as of January 5. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable.
- Xavier Brenner has covered global market, business and economic trends for Interactive Brokers Asset Management since 2013. An experienced financial journalist, Brenner offers analysis and insights on the stories that matter to the discerning investor.