The New York City teachers’ retirement fund has become the largest pension fund in the country to rid itself of holdings in gun stocks.
The city comptroller, John C. Liu, announced the divestment in a statement on Friday, saying, “Our investment portfolio gains nothing by doing business with these firms. This is a sound decision that sends an important message about our commitment to addressing the plague of gun violence in every possible way.”
With a total of $46.6 billion in holdings, the pension fund is divesting itself of a relatively small amount, $13.5 million, in the stocks of five gun companies, including Smith & Wesson Holding Corp. (NASDAQ: SWHC) and Sturm, Ruger & Co. (NYSE: RGR). The pension program affects approximately 183,000 members, retirees and others. “The move follows a thorough review process of the fund’s exposure to such investments in light of recent gun-related tragedies,” Liu said.
The Dec. 14, 2012 school shootings in Newtown, Connecticut, have ignited impassioned debate about gun control and pushed new gun control measures to the top of President Obama’s second-term domestic agenda, an issue he highlighted in his recent State of the Union address.
Since the mass shooting in December, a number of other pension funds have been examining the divestiture option or are already beginning to divest, including CALPERS, the California teachers’ retirement fund, which has about $5 million of its $254.2 billion fund invested in gun manufacturers.
On Friday Michael Mulgrew, president of the United Federation of Teachers, praised the decision of the NYC teachers’ pension fund, saying, “This is the right thing to do. After the tragedy at Sandy Hook, we as educators had to make sure that guns were not part of our holdings.”
But public pension divestment isn’t likely to impact the $11.7 billion gun industry in this country in any significant way.
Smith & Wesson, for example, one of the biggest publicly traded gun manufacturers, experienced record-level quarterly sales growth of $136.6M, a 48-percent year-over-year increase, according to its second quarter financial results released last month. The company’s gross profit margin was 35.5 percent, with operating income of 19.5 percent and net income of $16.4M – or $0.24 per diluted share. Growth in its consumer channel showed quarterly unit growth of 49 percent versus market growth of 20 percent.
The company also noted that it “increased our manufacturing capacity and outsourcing capabilities.”