Dan Morain

Gun maker Remington heads toward bankruptcy. California teachers were right

California’s massive public pension funds should not divest from holdings based on political winds, with notable exceptions. One involves investments in companies that make assault weapons that are illegal under California law. That effort gained traction after the 2012 massacre at Sandy Hook Elementary School. Let’s connect some dots:

 
Opinion

▪ Remington Outdoors made the military-style assault weapon used to slaughter 26 children and educators at Sandy Hook.

▪ Cerberus Capital Management, the New York-based private equity firm that owns Remington, considered unloading it after Sandy Hook, but thought better of it because, well, Barack Obama was awfully good for gun sales.

▪ Donald Trump? Not so much. With Trump in the White House, fear mongers at the National Rifle Association can’t readily fan gun owners’ angst that Uncle Sam will confiscate their firearms. So gun sales fell in 2017, as did some gun company stock prices. Remington explained declining gun sales in a 2017 financial report, citing among the reasons: “The impact of presidential, congressional and state electoral outcomes on the demand for our products.”

▪ Remington announced the other day it would restructure its crushing debt by declaring bankruptcy. As part of the deal, Cerberus apparently will lose control of the gun maker.

▪ Stephen A. Feinberg, Cerberus’ boss, was among Trump’s leading Wall Street backers, giving $1.475 million to a super PAC that spent $21 million to attack Hillary Clinton and help Trump, the Center for Responsive Politics reports. As president, Trump rewarded Feinberg by placing him on his team of economic advisers. Not sure how that’s working out.

▪ The California State Teachers’ Retirement System, reacting to the Sandy Hook slaughter, sold much of its gun stock holdings in 2013. However, Cerberus balked at letting CalSTRS shed its Remington holdings.

▪ The California Federation of Teachers, impatient over the delay, took to demonstrating at Cerberus’ L.A. office and CalSTRS in 2015. Cerberus relented, allowing CalSTRS to exit Remington in June 2015, when gun sales were solid. Terms were not announced. Given the downturn in gun-related profits, CalSTRS may have dodged a bullet.

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