SIG P329

Cerberus Selling Freedom Group – WOW, That Was Fast

“It is apparent that the Sandy Hook tragedy was a watershed event that has raised the national debate on gun control to an unprecedented level.”

-Cerberus Capital Management

Early this morning Freedom Group‘s owners Cerberus Capital Management announced the decision to sell. FGI Companies include Remington, Bushmaster, DPMS/Panther Arms, Marlin, H&R, NEF, LC Smith, Parker, Dakota Arms and Mountain Khakis.

Their full statement –

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 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.

In 2006 affiliates of Cerberus Capital Management, L.P. made a financial investment in Freedom Group. Freedom Group does not sell weapons or ammunition directly to consumers, through gun shows or otherwise. Sales are made only to federally licensed firearms dealers and distributors in accordance with applicable laws and regulations. We do not believe that Freedom Group or any single company or individual can prevent senseless violence or the illegal use or procurement of firearms and ammunition.

It is apparent that the Sandy Hook tragedy was a watershed event that has raised the national debate on gun control to an unprecedented level. The debate essentially focuses on the balance between public safety and the scope of the Constitutional rights under the Second Amendment. 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.

There are, however, actions that we as a firm can take. Accordingly, we have determined to immediately engage in a formal process to sell our investment in Freedom Group. We will retain a financial advisor to design and execute a process to sell our interests in Freedom Group, and we will then return that capital to our investors. We believe that this decision allows us to meet our obligations to the investors whose interests we are entrusted to protect without being drawn into the national debate that is more properly pursued by those with the formal charter and public responsibility to do so.

Our thoughts and prayers are with the families and communities impacted by this tragic and devastating event.

20 Responses to “Cerberus Selling Freedom Group – WOW, That Was Fast”

  1. Haji says:

    That’s weak. I do have about a hundred bucks I can work with; I’ll send in my offer and I should be the new owner of Freedom Group later today. If they’re loopy enough to sell right now, they’ re loopy enough to sell cheap.

  2. “The debate essentially focuses on the balance between public safety and the scope of the Constitutional rights under the Second Amendment.” The show their true colors.

  3. kris says:

    im in for a hunsky too. i say we build the pot and make our offer. SSD FTW!

  4. Ray says:

    Ok fine, they are selling…but now the real question is who are they selling the company to? Would another investment firm be interested in FGI considering the recent tragedy or are we looking at another ‘buyer’ who will have a greater hand in controlling what FGI does or will do in the future?

    ps. SSD, great op-ed piece on Sandy Hook. Very well written which sparked a pretty good debate. Both sides have their points and one answer isn’t going to fix all the problems.

  5. MarkM says:

    Like they said, they are just a pension fund manager, so they are bailing.

    I take exception to two of their comments: “it’s a watershed event.” Really? I thought Columbine was. What do they think they know?

    The other, “attempt to shape or influence the gun control policy debate. That is the job of our federal and state legislators. ” Even more,”that is more properly pursued by those with the formal charter and public responsibility to do so.”

    Which I interpret as “you louts aren’t capable of exercising common sense about it, so your overseers need to fix it. ”

    Corporations are the biggest instigators of taking our rights away. Can you carry concealed at work? Even have a gun in the trunk? Talk about firearms in the lunchroom? Not retail, not in hospitals, not a lot of places. It’s not allowed. They restrict free speech, too. You have to do things their way on the clock and on their property.

    That’s who’s behind gun control. And they will jerk your paycheck and make you conform, like it or not. What’s unfortunate is how many will cave in and do nothing.

    • JohnnyB says:

      No attempt to “shape or influence,” but then “There are actions that we as a firm can take… sell our investment…”

      Becasue that’s not a political message.

  6. Sal Palma says:

    I would not draw any conclusions from Cerberus Capital Management’s announcement other than its is simply part of the exit strategy, which is good for the Freedom Group assuming they have the depth in management to be successful. FG has been doing well particularly with military sales and is once more a credible player in that space.

    Decisions like these are not made overnight and it is highly unlikely the Newtown incident has anything to do with it.

    Threatening the entire industry is the looming gun control frenzy. The bodies of these wonderful little children were not even cold yet before the mainstream media started leveraging the tragedy to review the gun control.
    What’s at risk for the Democrats is that in 2 years the will probably loose control of the Senate.

    The White House has a lot at stake in 2014 and so does the Democratically controlled Senate. Best course of action is to communicate regularly with your Congressmen.

  7. Andrew says:

    Just as a quick FYI…. freedom group reported net sales of $677.3 million for the nine months that ended in September 2012, a 20 percent increase compared with the same period last year. If I was an investor I would see this as a breach of fiduciary duty. While I’m sure they are using an equitable reason, i wouldn’t be surprised to see some sort of derivative suit against Cerberus.

  8. straps says:

    My pension fund (kind of a large on on the west coast of the US–we also dabble in skyscrapers and mineral exploitation of other planets–joking about the latter, not the former) announced its intent to dump FG and anyone who has holdings. I know others have threatened to follow suit.

    I fall on the side of intelligent discussion (not necessarily BANNING EVERYTHING, not necessarily ARMING HOMEROOM TEACHERS), moving forward, but behavior like this from people who fancy themselves leaders is the kind of impulsiveness that justifies the concern from Average Joes about easy wrongs vice hard rights.

  9. Shay says:

    The next legislation will be an executive order not a congressional event. George Bush senior did it and so did Clinton. So this will not take long. By March you will see a significant executive order that will change it all forever.

  10. Qajaqon says:

    So much for “Freedom”………… Freedom Group.

    ……and they all fall down!

    Nous Defions

  11. Justin says:

    Sounds like they are anticipating the “assault weapons” ban to be passed sooner than later. Has nothing to do with their view on the second amendment. Drop the company before the bill is announced and they have a shot to make some cash, wait until the announcement and they will be stuck with a hemorrhaging investment.

  12. SGT Rock says:

    Gotta love knee jerk decisions and reactionary thinking. Pathetic.

  13. Burned says:

    These brands have done nothing but suffer sense they took over.

    Look at all the Remington Products being marketed to LE, that they can’t even ship (RACS, updated ACR, etc.).

  14. Ex-St. Paul Resident says:

    First off, Cerberus is not a pension fund, they are an investment company. Many of their clients, however, are pension funds.

    Additionally, according to a Military Times piece they are getting pressure from one of those pension funds, specifically the California State Teachers’ Retirement System who has $751.4 million invested into Cerberus. Here is my comment on that site:

    Cerberus is selling off, or at least feigning it, in order to appease one of their larger investors. They fear that if CalSTRS un-invests, then other large clients will follow. The relatively small amount of their funds they have invested in the Freedom Group isn’t worth the loss of this and potentially other clients. It’s less about a political statement and more about covering their own ass. If it was trully a political statement, they wouldn’t have invested in the first place.

  15. Bobbydavro says:

    With the afghan drawdown happening as of 13-14 and defence budgets getting cut in the next financial year-less money to spend on little things like guns the 600+ million mentioned is the military stocking up on contracts because it knows it ain’t gonna get that money next year the bottom will fall out of the arms manufacturing trade yes there will be modernisation program’s but the contracts will go to fn,colt,hk and to a smaller degree remmington, many of the other companys listed are used as sub contractors to provide spares and smaller partsAnd let’s face it without a war you don’t need as many of them , I personally think that using this incident as a smoke screen is a pretty astute move-get out while you’re ahead as it were they havent come to this decision overnight, it’s obviously been on the cards for a while