Share prices of firearms makers took a beating last week in the wake of the mass shooting at a Connecticut elementary school as investors pulled back in anticipation that Congress might resurrect a ban on assault weapons and accessories that have fueled much of the industrys growth in recent year.
The National Rifle Association attempted to reverse the tenor of the renewed national debate on gun control Friday at a press conference where it said armed school guards rather than more gun restrictions would do the most to prevent future tragedies.
The NRA called on Congress to appropriate enough money to put armed police officers in every American school, but also unveiled a program to develop a multi-faceted school protection program that would rely in part on trained and armed volunteers. The National School Shield Emergency Response Program is being spearheaded by Asa Hutchinson, a former U.S. Senator from Tennessee and former director of the Drug Enforcement Agency.
The NRAs announcement capped of a mercurial week for the firearms industry. Within four days of the mass shooting, pension funds were reviewing their investments in gun makers, share prices in publicly traded firearms makers were down sharply, the nations largest firearms maker was put up for sale and the nations largest gun dealer-Dicks Sporting Goods – had suspended sales of assault-style rifles. On the other hand, other dealers were reporting a spike in sales of assault style rifles, ammo and clips in anticipation their sale could be outlawed or restricted early next year.
The Dec. 14 massacre resulted when a 20-year-old man shot his way into Sandy Hook Elementary School in Newton, CT armed with a .223 caliber semiautomatic Bushmaster rifle and two pistols he had taken from his mothers home after shooting her to death that morning. The rifle was equipped with clips that enabled the firing of up 30 bullets without reloading. All of the children killed had been struck by bullets at least twice and some had been shot as many as 11 times, according to news reports.
The shooter, who had a history of mental illness and took his own life as police arrived at the school, had been taught how to fire the rifle at a local shooting range by his mother.
By early Tuesday morning, Cerberus Capital Management announced plans to divest The Freedom Group, which it had built into the nations largest firearm companies starting with its 2006 acquisition of Bushmaster Firearms. Freedom Group generated sales of $775.0 million in 2011, when it withdrew plans to go public. The company is on pace to grow sales 20 percent this year, thanks in part to brisk sales of semi-automatic sport rifles, ammunition and accessories.
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, Cerberus said in a statement of its decision. The companys decision followed a conversation in which one of its largest investors, the California State Teachers Retirement System, began reviewing its 2.4 percent stake in The Freedom Group.
The New York Times reported that State officials in New York also began a review of state pension funds investment in firearms companies.
In the wake of the NRA press conference, share prices for Smith & Wesson Holding Corporation and Sturm, Ruger & Co. had recovered some of their losses of the week but were still down 15 and 8 percent respectively compared with their prices the day before the Newtown shooting.
Dicks Sporting Goods, meanwhile, said it had suspended sales of modern sporting rifles at all its more than 500 stores nationwide and stopped selling guns altogether at its store near Newtown in a sign of respect for the victims and their families.
New York City Mayor Michael Bloomberg called on the Obama Administration to name an interim director for the Bureau of Alcohol, Tobacco and Firearms (ATF) and step up prosecution of those trying to illegally buy guns. The ATF has gone without a director for six years, most recently due in part to opposition to President Obamas nominee for the positions, which the NRA has labeled as an anti-gun zealot.
On Wednesday, President Obama appointed Vice President Joe Biden to develop a strategy to combat gun violence that he plans to forward to Congress not later than January. The recommendations could include new restrictions on the sale of military style assault weapons and ammunition clips and address access to mental health care and violent video games. As a U.S. Senator, Biden authored a 1994 crime bill that included the ban of assault weapons that expired in 2004.
The renewed debate, meanwhile, appeared to spur rather than dampen sales across America, as people rushed to snap up the assault-style rifles, ammo and clips at independent dealers, Wal-Mart and Cabelas.
