After the massacre: Major firm sells stake in rifle makers Bushmaster while gun sales surge
18 Dec, 2012 17:13
In response to the deadly shooting at a Connecticut Elementary School, a private equity firm took a stand against gun violence Tuesday, announcing that it would sell its investment in the gunmaker Freedom Group.
The private equity firm Cerberus Capital Management cut its ties with the gun manufacturer, which has been thriving financially. Private equity firms usually make long-term investments in a company, but Cerberus took a radical step by selling its investment in the Freedom Group, since the gun manufacturer produced the .223 Bushmaster rifle used in last week’s school massacre.Although the firm admits its role is not to shape the gun control policy debate, Cerberus said in a press release that this action will keep it out of the national debate and fulfill its ‘obligations’ to its investors. The firm makes investments on behalf of clients including firemen, policemen, teachers, and other municipal workers and unions.“It is not our role to take positions, or attempt to shape or influence the gun control policy debate. That s the job of our federal and state legislators,” the firm wrote in a press release.“We believe that this decision allows us to meet our obligations to the investors whose interests we are entrusted to protect without being drawn into the national debate that is more properly pursued by those with the formal charter and public responsibility to do so,” the firm added.The firm said it would hire a financial adviser to sell its interests in the Freedom Group and return the proceeds to investors. The gun manufacturer was originally created by Cerberus after it merged it with other gun companies and turned it into a profitable company. Freedom Group reported net sales of $677.3 million in a nine-month period ending September 2012, which is up 20 percent from the same period last year.It is unclear if personal reasons are involved in the decision, but Bloomberg News reported that the father of Cerberus founder and CEO Stephen Feinberg is a resident of Newtown, Conn. – the town where 26 people were massacred on Friday. The father, Martin Feinberg, called the shooting “devastating” in an interview.In giving up its investment in the Freedom Group, Cerberus Capital Management has decided that it no longer wants to profit from the manufacturer that made the deadly assault weapon used by 20-year-old gunman Adam Lanza.But even though the firm made a stance in terminating its financial investment in the manufacturer, nationwide gun sales have surged since the massacre. With many Americans fearing a ban on assault weapons in the wake of the shooting, thousands of Americans are lining up to buy the AR-15, which is the weapon used by the gunman, as well as the .223 ammunition.The Colorado Bureau of Investigation conducted more background checks each day this past weekend than during any other single day in history. Northwest Armory, a San Diego gun store, made record-breaking sales this weekend. A gun store in southwest Ohio had a line of 400 people waiting to get in.“Sales were through the roof on Saturday,” Joe Eaton of the Buckeye Firearms Association told Fox News. “People were buying everything they could out of fear the president would try to ban certain guns and high-capacity magazines.”Some stores ran out of guns, while others were forced to bring in more employees or make their employees work overtime to accommodate the large number of requests.The Sandy Hook Elementary School shooting may not have stopped the sale of firearms, but it did open the door to a fiery debate between gun advocates and those immensely troubled by the public availability of assault weapons.