Cerebus Capital, which owns Freedom Group (Remington, Bushmaster, Dakota, and others) announced it intends to sell its entire investment in Freedom Group.

“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 asserted in its statement.

You would think they'd sell Bushmaster if they were concerned about ownership of weapons capable of mass mayhem. Why pick a company that makes single-action 5-shooters?

quote:

Originally posted by AnotherAZWriter:
Cerebus Capital, which owns Freedom Group (Remington, Bushmaster, Dakota, and others) announced it intends to sell its entire investment in Freedom Group.

“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 asserted in its statement.

So they have no confidence in their ability to dodge regulation, sell responsibly, and avoid lawsuits, or did I miss some of the code words?

Pure PC and buttering up to Obama [who is still the best gun salesman ! ]
It can't be for logic as gun sales have been going through the roof !

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Originally posted by mete:
Pure PC and buttering up to Obama [who is still the best gun salesman ! ]
It can't be for logic as gun sales have been going through the roof !

Actually, stocks of firearms companies have been pummeled since Sandy Hook. This one is different...anyone read the WSJ cover story today about Dems and Repubs who have been rated A by the NRA now saying we need to revisit gun control?

I have always been concerned that they would sell to somebody like Bloomberg or Soros.

The irony is, that they just purchased LAR last month. LAR produces most of the uppers and lowers in this country for small companies.

I can't believe these knuckleheads are even still in business. They lost a fortune on Chrysler and now are set to sell at the worst possible time.

It takes some dumb ones and some others to get to an average.

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Originally posted by Mikelravy:
I can't believe these knuckleheads are even still in business. They lost a fortune on Chrysler and now are set to sell at the worst possible time.

Your comment reminds me of the professor who told Warren Buffet what he was doing wrong in terms of investing.

Buffett's response: "If you are so smart, how come I am so rich?"

Feinberg is a self made billionaire who counts game hunting among his hobbies.

There was an organized 'Protest' in front of a gun shop in our area. Didn't amount to much, but I suspect that mentality is here to stay (and probably grow). Am hearing some of the corporate chain outdoor stores are positioning themselves away from gun sales.

Cerebrus has had Fredom Group up for sale for about a year. The new articles are being spured by the California Teachers retirment fund threatening to pull their $751 million cash fund out of Cerebrus.

quote:

Originally posted by Sam:
Cerebrus has had Fredom Group up for sale for about a year. The new articles are being spured by the California Teachers retirment fund threatening to pull their $751 million cash fund out of Cerebrus.

Another interesting fact: Feinberg's father lives in Newtown, CT.

A couple of points about Cerberus and private equity firms generally, based on my own knowledge of that industry:

One, such firms typically plan to buy, "restructure" (often a euphemism for stripping out assets and loading with debt) and reselling within a 4-5 year time frame. Cerberus's action is consistent with that pattern, regardless of any politics vis-a-vis guns. It would be ready to sell anyway.

Second, PE firms almost always set up special funds to hold investments and raise money from private investors such as unions, public pension funds, university endowments, etc. that are looking for high yields. Those special funds are set up with relatively short lives -- 4-5 years -- after which they are cashed out and the PE firm looks for investors to roll over the proceeds into a new fund. Unfortunately, as my son has pointed out (since his own very successful Asian fund is designed differently), the normal economic cycles in the markets do not coincide with the lives of those funds. That means that the young hot-shot bankers who manage them have to buy at inconvenient times (i.e., high), collect huge bonuses based on the volume of their deals and then sell at similarly inconvenient times (low).

Cerberus has a typical record of being caught in that trap by the industry's faulty investment model. In Japan it is well known, but its record does not impress me. My son researched the performance of over 600 fund managers active in Asia markets (PE groups often have several funds.) Of those, 99% have failing records measured over several funds they've managed. He knows all the winners personally. Thus Cerberus is not alone in making bad investments. Its investment in the Freedom Group seems a perfect example of ignoring the risk of being caught by the cycle. The term "smartest guys in the room" is a misnomer.

quote:

Originally posted by Sam:
Cerebrus has had Fredom Group up for sale for about a year. The new articles are being spured by the California Teachers retirment fund threatening to pull their $751 million cash fund out of Cerebrus.