We have warned after the Newtown massacre that more gun control efforts would be coming down the pipe. New York City's Mayor Bloomberg has called on the President to lead in the charge against gun control to ban certain gun sales. The President's speech on Sunday night effectively laid out these controls coming down the pipe, but the President did not formally use the words gun control that evening and these words have been largely avoided since.
Smith & Wesson Holding Corporation (NASDAQ: SWHC) and Sturm, Ruger & Co. Inc. (NYSE: RGR)have seen their stocks hit hard since the massacre. Private equity giant Cerberus has even gone as far as saying that it plans to sell off its gun-making units. We would note that this massacre has created a rush to buy guns, ammo, and other products, so it possible that these companies will raise guidance. The problem is that if gun control efforts are successful then it does not matter what the demand is today because they will face more regulation and more restricted sales ahead.
Here is a summary of President Obama's speech on gun control:
More Americans have died from gun violence since the massacre last Friday… Challenging old assumptions and this needs to lead to action… There is no law that can protect against all violence… Medical care efforts need to be pursued… The fact that the issue is complex cannot be an excuse… Obama asked VP Biden to come up with a set of concrete proposals no later than January… Not a study that is a report in 6 months… Biden wrote the 1994 crime bill that included an assault weapons ban… there is a growing consensus to build from to support banning sales of assault rifles and high-capacity ammo clips and background checks… the ATF is also bein encouraged to participate… the Second Amendment protects the right to bear arms… the vast majority of gun ownership is responsible, but the vast majority is likely to support law-breakers from buying a weapon of war and for people to get military-style weapons so easily… I will use all the power of this office to help prevent tragedies of this sort even if not all can be prevented… This effort requires the help of the American people… need to stand up and say "enough!" on behalf of our kids…
The Q&A from reporters has been focused on the fiscal cliff rather than on the issues around gun control.
Smith & Wesson Holding Corporation (NASDAQ: SWHC) was up 6% at $8.26 and Sturm, Ruger & Co. Inc. (NYSE: RGR) was up 4.5% at $42.41 before the President's speech today. Sturm, Ruger shares are down from a recent peak of $60 and Smith & Wesson shares are down from a recent peak above $11.00.
Dicks Sporting Goods Inc. (NYSE: DKS) has announced some changes to gun sales policies and Cabela's Incorporated (NYSE: CAB) is a large seller of hunting, fishing and camping equipment which includes guns and ammunition.
As a reminder, Alliant Techsystems Inc. (NYSE: ATK) is evaluated as a defense and aerospace company but it is the largest maker of gun and sporting ammunition in America with brands such as Federal Premium, Alliant Powder, RCBS, CCI, Fusion, Speer Ammo, Speer Bullets, Estate Cartridge and Blazer.
This article has been posted without comment about the tragedy in Newtown and other massacres that have taken place. Our thoughts are with the families and victims impacted by these tragedies.
UPDATE at 12:55 PM EST ON SHARE PRICE CHANGES:
Smith & Wesson Holding Corporation (NASDAQ: SWHC) is up 8.8% at $8.48; was up 8.4% at $8.45 (12:30)
Sturm, Ruger & Co. Inc. (NYSE: RGR) is up 6.7% at $43.32; was 6.1% at $43.08 (12:30)
Alliant Techsystems Inc. (NYSE: ATK) is up 9-cents at $62.80; was up 1-cent at $62.72 (12:30)
Dicks Sporting Goods Inc. (NYSE: DKS) is down by 8-cents at $46.27; was up 3-cents at $46.38 (12:30)
Cabela's Incorporated (NYSE: CAB) is up 3.4% at $40.08; was up 3.4% at $40.10 (12:30)
JON C. OGG
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