Teachers' fund to dump firearm investments

CalSTRS becomes first public pension fund to to divest gun maker stocks

The investment committee of the $154.3 billion California State Teachers' Retirement System (CalSTRS) voted unanimously today (Jan. 9) to sell any investments in companies making firearms that the state bars private citizens from owning, as well as makers of high-capacity ammunition clips. Right after the Dec. 14 mass murders in Newtown, Connecticut, California Treasurer Bill Lockyer told Cerberus Capital Management, which owns the largest U.S. gun maker, that he would recommend that the state's two biggest pension funds divest investments in gun makers. Shortly, Cerberus said it would seek to sell Freedom Group, Inc., the gun maker that produces the Bushmaster semi-automatic rifle used in the Newtown mass murders, and other firearms. Cerberus then hired a financial adviser and put Freedom Group on the block.


This desire could be difficult to implement. Just exactly, if anything, the State of California "bars private citizens from owning" is not clear and never has been. Federal law governing the possession of fully automatic weapons and such things as sawed-off shotguns has generally been the determinant of which firearms are forbidden. There is only one publicly traded firearms manufacturer in the US that is a clear-cut "pure" firearms company, and that is Sturm-Ruger (RGR). They produce beautifully-crafted firearms, none of which ever (to my knowledge) was considered an assault weapon. Then there is Smith & Wesson Holdings (SWHC), but again it produces fully-legal products that are well respected and not accused of being assault weapons. The other operations that handle and sell such things as high-capacity ammo magazines usually import them or have them fabricated by small-scale operations here at home. There is little chance of public ownership of such operations.

Looking up Remington, Mossberg, Colt, Marlin, Savage, Glock and a number of other makes of guns sold today reveals nothing as far as public ownership. Some are undoubtedly parts of foreign companies or domestic conglomerates, and with some digging one might find the connection. But for the most part such companies are not held by STRS now, so there is little to eliminate from the portfolio.

This step is more symbolic than anything else in my opinion. If anyone is really comforted by such symbols, this will go down well. STRS really has better things to do than make symbolic investment changes. It has huge unfunded pension liabilities, and really needs to address those shortfalls.

Visduh: If a gun company is part of a publicly-traded conglomerate, I can't see what's wrong with dumping the stock of the conglomerate. Best, Don Bauder

Right. But as you paraphrased this story, it was intended for companies that make a limited class of guns or gun accessories. What I saw there would not affect the aforementioned Sturm Ruger or Smith & Wesson, because they don't make (as far as I can determine) those things. It isn't that it is just any "gun company" that they are trying to identify, This isn't a simple thing to implement due to definitional matters and identities.

Visduh: As I read it, they want to dump holdings in companies making guns that are illegal in California. Perhaps that is the only legal way they could have done it. Best, Don Bauder

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