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Thriving Gun Industry Hammered After Sandy Hook Massacre

Daily Ticker

The horrific slaughter of 7 adults and 20 children with an assault weapon last week has once again focused attention on America's liberal gun laws.

The Sandy Hook massacre has also done something that other recent mass shootings have failed to do, which is to cause some investors and retailers to rethink their support of gun manufacturers.

The prevailing investment ethos in this country is that investors should be concerned with nothing but financial performance: As long as a company delivers compelling returns to its shareholders, those shareholders should not have to care about how the company does business or what sorts of products or services it sells.

Earlier this week, however, a private equity firm called Cerberus announced that it will sell its stake in "Freedom Group," a large gun manufacturer that makes the Bushmaster assault rifle used in the Connecticut killings.

Cerberus is run by an investor named Stephen Feinberg, whose father lives in Newtown, Connecticut, where the massacre took place. The firm's announcement made clear that Cerberus would leave the arguments about tighter gun control to politicians, but the firm's actions speak louder than its words. Cerberus no longer wants to support (or benefit from) a company that manufacturers these weapons.

Meanwhile, Dick's Sporting Goods announced that it has suspended the sales of semi-automatic rifles at its 480 stores, and Walmart removed one such gun from its web store. And the stocks of gun manufacturers like Smith & Wesson have dropped sharply.

In other words, the Sandy Hook killings have not just galvanized public-opposition to America's lax gun laws. They have prompted those who normally steer clear of any moral or legal questions about the businesses they invest in to vote with their feet.

For those who see an obvious connection between the ease of acquiring military-grade assault weapons and the prevalence of mass shootings and gun-related deaths in this country, this is good news.

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