Freedom Group
CalSTRS makes big decision on gun investments
January 10, 2013: 11:39 AM ETCalifornia teachers pension plans to divest of certain firearms makers.
FORTUNE -- The California State Teachers' Retirement System (CalSTRS) board yesterday voted unanimously to divest itself of investments in makers of firearms and ammunition that are illegal to purchase or own in the state of California. This includes those who produce assault rifles, "Saturday night specials" and/or high-capacity magazines. The divestiture option also was endorsed by CalSTRS chief investment officer Chris Ailman, who does not have a board vote.
All of this follows last month's discovery that CalSTRS had a multi-million dollar interest in Freedom Group -- maker of the Bushmaster AR-15 rifle used in the Newtown massacre -- via its investment in a fund managed by private equity firm Cerberus Capital Management.
On the private equity side, the CalSTRS divestiture decision won't mean too much since Cerberus already has announced its intention to sell Freedom Group. If Cerberus ultimately chooses not to sell or can't find a buyer, then CalSTRS would look to reduce its exposure to the firm. In public equities, CalSTRS has a combined $2.9 million of exposure via investments in index funds that hold Smith & Wesson (SWHC) and Sturm Ruger & Co. (RGR):
It is worth noting that there was no discussion during yesterday's board meeting of investment exposure to retailers who sell firearms like the Bushmaster AR-15 outside of California. One example would be Academy Sports & Outdoors, owned by CalSTRS manager Kohlberg Kravis Roberts & Co. (KKR).
During the meeting, Chris Ailman acknowledged that the system kind of dropped the ball when Ceberus created Freedom Group, since the investment violated two of "risk factors" identified in the system's environmental, social and governance (ESG) policy:
CalSTRS historically has asked outside managed to read its ESG policy and certify compliance at the time of initial investment, but now plans to require managers to do so annually.
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KKR's rifle retailer
Private equity's firearms interests go far beyond Cerberus and Freedom Group.
FORTUNE -- Last week another lunatic used a Bushmaster .223 rifle to murder multiple people. This time the victims were firefighters responding to a call in Webster, New York. Guns may not cause massacres, but people who massacre seem to favor the same type of "gun."
We previously reported about how Cerberus Capital Management plans to divest the parent company of Bushmaster MORE
Dan Primack - Dec 31, 2012 11:27 AM ET -
Cerberus: We want out of gun biz
Bushmaster rifle owner decides to sell the company.
FORTUNE -- Private equity firm Cerberus Capital Management announced early this morning that it plans to sell Freedom Group, a firearms conglomerate that produced the .223 Bushmaster rifle used in last week's elementary school massacre.
Here is the firm's statement, in full:
We were shocked and deeply saddened by the events that took place at the Sandy Hook Elementary School in Newtown, CT on December 14, 2012. We MORE
Dan Primack - Dec 18, 2012 6:30 AM ET -
The money behind the Newtown massacre
One way to reduce mass shootings is for big institutions to stop funding the assault weapon manufacturers.
FORTUNE -- Do you know who owns more than a 6% stake in the maker of .223 Bushmaster rifles, like the one used last Friday to murder 20 first graders and seven adults in Newtown, Connecticut? California public schoolteachers.
The company in question is Freedom Group, a privately-held firearms conglomerate formed by private equity and MORE
Dan Primack - Dec 17, 2012 2:32 PM ET
