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Gun Stocks Rise In Wake Of Calls For Greater Restrictions

Say Contributor

Yet again, there was a mass shooting in America, this time two. Yet again, there were calls for greater restrictions to automatic firearms, which seem unlikely to pass any time soon. Any yet again, the stocks of gun manufacturers saw a nice bump. Rinse, Lather Following last weekend’s dual mass shooting in El Paso and Dayton, Ohio, which left a total of at least 31 people dead, there was a renewed cry for tighter gun regulation, including stricter background checks for purchases, closing various gun show loopholes and banning the sale of automatic weapons. In response, shares of American Outdoor Brands, formerly known as Smith & Wesson, rose 3% while Sturm, Ruger & Co. was up 2%, while pretty everyone else on the stock market had a crappy day. Big Bans It’s very common for gun manufacturers to see their stock rise after mass shootings. Gun enthusiasts, worried about impending bans, tend to rush out before regulations take place, even though those regulations never seem to take place. (Senate Majority Leader Mitch McConnell, who is fond of calling himself the Grim Reaper for progressive legislation, is refusing to let the Senate vote on a recent background legislation bill.) Gun sales did tend to surge more after similar mass shootings during President Obama’s term, as he advocated stricter restrictions than our current President. Index Flex Investors are in a tricky spot when it comes to guns. Even if they don’t want to support the industry, many major asset firms, including Blackrock and Vanguard, own shares in gun manufactures and can’t simply divest them from their general index funds. But following last year’s Parkland shooting, BlackRock created new ESG index funds that don’t include gun companies or businesses that sell guns. Though some raised eyebrows about the effectiveness of the firm keeping guns in some indexes and out of new ones, it was a significant step taken by an institutional investor with sizeable influence over the stock market. And while gun companies might see a temporary boost, overall gun sales are down, with AOBC reporting a recent third quarter loss of 5.7 million, down from last year’s third-quarter haul of $11.4 million. -Michael Tedder Photo: Eric Thayer/REUTERS {AOBC, RGR, NASDAQ}