Ending a lengthy effort that had frustrated school teachers, CalSTRS has sold its investment in the firearms manufacturer linked to the 2012 massacre at a Connecticut elementary school.
The California State Teachers’ Retirement System said it has unloaded its holdings in Remington Outdoor, formerly known as Freedom Group, the maker of the assault rifle used at the mass shooting at Sandy Hook Elementary School.
CalSTRS said it was precluded, for legal reasons, from disclosing the financial terms of the deal.
The announcement came three weeks after Remington’s owner, New York private equity firm Cerberus Capital Management, offered to let CalSTRS and other investors cash out of their investments in the gun maker. Cerberus will place its investment in Remington in a separate investment vehicle.
“Consent to monetize our exposure to Remington Outdoor completes our decision to divest from banned firearm manufacturers,” said CalSTRS Chief Executive Jack Ehnes in a prepared statement. “All along we have sought a transaction that balances the best financial interests of the more than 879,000 educators we serve, while holding consistent with the values of our membership.”
A few months after the Connecticut shooting, in which 26 students and teachers died, the CalSTRS board pledged to sell its holdings in makers of guns that are illegal in California. It quickly sold $3 million worth of shares in two publicly traded companies, Sturm Ruger and Smith & Wesson.
Remington Group was another matter. CalSTRS held an indirect stake in Remington through its $375 million investment in Cerberus, a firm that owns stakes in a diverse portfolio of companies.
In April, the California Federation of Teachers staged a “teach-in” outside CalSTRS’ headquarters in West Sacramento, demanding the pension fund get rid of its Remington investment. The teachers held a simultaneous protest at Cerberus’ regional offices in Los Angeles.
At the time, CalSTRS officials saidthe fund was unable to get rid of its Remington holdings. For contractual reasons, it said it couldn’t simply bail out of its Cerberus investment. Nor did it have the power on its own to force Cerberus to sell the gun maker.
Finally, CalSTRS said it has legal responsibilities to maximize profits and minimize losses for its members.
The impasse ended in mid-May when Cerberus offered an exit plan for CalSTRS and other investors. For its part, Cerberus has tried and failed to unload Remington from its portfolio.
Hoping to avoid a repeat of the Remington problem, CalSTRS now has provisions in its private-equity agreements that exclude banned firearms makers and give the pension fund an option to bail out if the investment manager makes such an investment.