Investors Bet on Firearms and Against Public Safety — and it Backfired

Remington, an iconic 200-year-old gunmaker is preparing for bankruptcy court. In the heyday of Wild West cinema in the 1960s and ’70s, the Remington brand featured prominently, their revolvers being favored in such television shows as The Wild, Wild West and more than a couple John Wayne movies.

More recently, in 2014 Remington opened a factory to mass-produce AR-15s, the assault rifle favored by many mass murderers, including the Parkland shooter. So icon or not, it’s not sad to see this American firearm producer bite the bullet. But could it be a sign of things to come?

Well, yes and no. The story of the collapse of Remington is complex, and there are factors beyond the recent cultural pushback on the gun lobby which helped to seal the company’s fate. But if you’re a part of the majority of Americans sick and tired of gun violence, there is some real cause for encouragement here, as well.

Remington is owned–for a short while longer, at least–by Cerberus, a private investment firm. Remington is not publicly traded on the stock market, but it does have investors, through Cerberus. The acquisition of Remington must have seemed like a no-brainer at the time, and the formation of the holding group in 2007 paid dividends over the next several years, as gun sales soared under President Obama.

Yes, that’s right, Obama. Because the NRA narrative at the time pandered to a gun-toting base by fear-mongering that the Democratic president would try to take everyone’s guns away. Since the election of Trump, there has been a major slump in gun sales, pushing an already overextended Remington to nearly a billion dollars in debt, which is how we got to the point that Cerberus is cutting its losses, selling the crumbling property to other investors for pennies on the dollar to be dismantled in bankruptcy court and sold off in chunks.

That may seem a little disappointing and arbitrary a reason for a merchant of death to finally meet its maker, but there’s more to this story. Despite the Obama-era boost in gun sales, getting a return on firearm investments actually has become increasingly difficult. Just as many private investors refuse to allow oil and gas or tobacco companies into their portfolio, for an increasing number gunmaker stock is also a no-go, just as the divisive nature of the product has also made investment in the industry volatile at the best of times.

This is a problem for pro-gun investors, because whether in the form of publicly-traded stock or as a wholly-owned subsidiary, every investment requires both a seller and a buyer. Cerberus publicly announced the decision to unload Remington in 2012, after the Sandy Hook shooting. But years went by and the gunmaker’s debt grew with the investment firm still unable to find someone to take it. Unable to sell it for what they thought it was worth, Cerberus took a bath as the capital investment in Remington wafted away like smoke under the weight of the increased debt.

The reputational capital of gunmakers has decidedly soured in the last decade and it is becoming too toxic to touch. Guns are still profitable, but less and less so every year. Did you catch the film, The Big Short? Based on the sub-prime mortgage crisis, the main characters bet on a collapse of the housing market and won–meaning the American people as a whole lost.

Likewise, the financial argument for the purchase of Remington was predicated on continued firearm proliferation. In other words, investors effectively bet against public safety, against schoolchildren, against innocent lives.

This turned out to be a mistake. It’s true that gun violence has continually gotten worse, but not to the benefit of these gun investors. We’ve reached a point where investing in guns is too fraught even for major pro-gun advocates (which includes Cerberus’ owner).

This could be a sign that the idea that the cycle of increased gun proliferation and violence has finally reached its end. If we keep the pressure on, we could be looking at the overdue reversal of a destructive trend. Let’s do everything we can to ensure that American citizens–especially children–finally see their stocks rise as gunmakers’ shrink to near irrelevance.

Photo credit: Remington Arms Company

52 comments

Marie W
Marie Wabout a month ago

Thanks

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Karen H
Karen H7 months ago

Interesting that Remington is owned by Cerberus. Cerberus is the three-headed dog that guards the gates of Hell.

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Eric Lees
Eric Lees7 months ago

The USA is still the biggest arms exporter for military weapons which are mostly manufactured by different companies than civilian guns.

Don't forget nothing changed under Obama as far as military weapons. Both wings of the Oligarchy profit from intervention wars and conflicts around the world. Follow the money. If you really want change then you have to change how you vote. Nothing will change as long as we continue voting for the Oligarchy.

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Eric Lees
Eric Lees7 months ago

Clare O, I'm pretty sure there are mutual funds that meet your criteria. Or you could always invest in individual companies basically creating your own personal mutual fund.

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Chrissie R
Chrissie R7 months ago

Thank you for posting.

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Clare O
Clare O7 months ago

Thanks, the reason I do not have a pension is because nobody was providing a fund which was ethical. No arms, oil, tobacco, furs, experiments on animals. I invested in my mortgage and upgrading my home insulation and security instead.

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Clare O
Clare O7 months ago

Cerebrus is a vulture fund that buys up housing stock and raises the rents.

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John B
John B7 months ago

Thanks Joel for sharing the info and your perspective on the issue.

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Billie Sue B
Billie Sue B7 months ago

The violence in our country is just as stupid. The causes are not being address. The flip side of the issue is just as bad. Citizens are flee death from bands of militants in Africa and Syria. So yes, I'm a 2nd amendment support and a support of logic. The US can be both.

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Lisa M
Lisa M7 months ago

Noted.

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