Newtown School Shooting

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Gunmaker stocks plunge after Bushmaster sale announcement

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Share prices in the New England gunmakers, Sturm Ruger and Company of Connecticut and Smith and Wesson of Massachusetts plunged Tuesday after Cerberus Capital announced it would sell its stake in privately held manufacturer that produced the weapon used in the Sandy Hook massacre.

“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,” Cerberus said in a posting on its website. “We cannot comprehend the losses suffered by the families and friends of those killed by the unthinkable crimes committed that day.  No words or actions can lessen the enormity of this event or make a dent in the pain that was inflicted on so many.”

An affiliate in 2006 invested in Freedom Group, the parent company of Bushmaster, which makes the .223 rifle used in the killing of 20 first graders on Friday. Two handguns made by Glock and Sig Sauer were in the killer’s possession. None of these weapons are made by the New England companies.

Citing the rising level of debate over gun ownership, the company said; “As a Firm, we are investors, not statesmen or policy makers.  Our role is to make investments on behalf of our clients who are comprised of the pension plans of firemen, teachers, policemen and other municipal workers and unions, endowments, and other institutions and individuals.  It is not our role to take positions, or attempt to shape or influence the gun control policy debate. That is the job of our federal and state legislators.”

But Cerberus’ action might affect the industry dramatically, as it announced it has determined to immediately engage in a process to sell Freedom Group.

The announcement follows decisions by some retailers to pull guns off their websites in the wake of the tragedy, further hampering gun industry that has been breaking records for gun sales. But with institutional investors, including teachers and public employee retirement funds holding most of the stakes in the company, activity to get out of guns could affect the companies.

Ruger’s shares were off more than 5 percent to $41.55 while Smith and Wesson dropped almost 10 percent to $7.83.

Ruger’s top five institutional investors:

LONDON CO OF VIRGINIA 1,386,922

ALLIANZ ASSET MANAGEMENT AG 1,372,405

VANGUARD GROUP INC 1,346,614

CAPITAL WORLD INVESTORS 1,245,000 1

JAMES INVESTMENT RESEARCH INC 904,360

The Southport-based company has also attracted investment from California, Texas and New York retirement funds, including several teacher-specific funds.

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Frank Juliano

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