MINNEAPOLIS — Investors shunned some of the nation’s largest gun makers Tuesday in the aftermath of the Connecticut school shooting, including making plans to sell the company that manufactures the Bushmaster semi-automatic rifle used in the bloody attack.
Stocks of other gun companies fell, and one sporting-goods chain said it would temporarily stop sales of military-style firearms.
The most notable rejection of the gun industry came when the private-equity firm Cerberus Capital Management announced it would sell the maker of the rifle used in the massacre, which it called a “watershed event.”
The shooting “raised the national debate on gun control to an unprecedented level,” Cerberus said in papers announcing the planned sale. “We are investors, not statesmen or policymakers.”
Bushmaster, Remington and DPMS are among the brands made by Freedom Group Inc., the largest firearms maker in the U.S.
The Madison, N.C., company sold 1.1 million rifles and shotguns last year, along with 2 billion rounds of ammunition. Its products are sold to law enforcement and military customers, as well as retailers who serve hunters and gun enthusiasts.
Cerberus, a large private-equity firm best known for investing in Chrysler and other troubled corporations, appears to have been under pressure from two sources: investors and the threat of more gun control.
Officials at California’s huge teacher pension fund said they were reviewing a $600 million investment in Cerberus in light of the Connecticut shooting.
Through its stake in Cerberus, the California State Teachers’ Retirement System owns a 2.4 percent stake in Freedom Group, according to the pension fund.
Fund spokesman Michael Sicilia confirmed the fund owns approximately $4 million in shares of Sturm Ruger & Co. and $1.7 million in shares of Smith and Wesson.
Freedom Group has lost money in four of the last five years, according to financial filings on its website. Revenue in 2011 was $775 million, down from $848.7 million in 2009. Slightly more than half of its 2011 revenue came from guns, much of the rest from ammunition.
The assault weapons ban that expired in 2004 restricted the sale of some types of guns such as those made by Bushmaster. The adoption of a similar law “could have a material adverse effect on our business,” Freedom Group noted in its announcement.
Meanwhile, Dick’s Sporting Goods Inc. suspended sales of all “modern sporting rifles,” the industry term for military-style guns. The company also removed all guns from display at its store closest to Newtown.
Dick’s has not promoted military-style guns as much as some other retailers. Its circular distributed in newspapers on Sunday had a full page of hunting rifles, but no military-style ones.
Walmart Stores Inc., which sells Bushmaster rifles in some stores, said it would not change the guns it sells, although a Bushmaster rifle that it still sells stopped showing up on its website Tuesday.
All the talk about additional gun control appeared to be driving increased gun sales, though. The Colorado Bureau of Investigation said it received a record 4,154 requests for background checks Saturday, the day after the shooting. That was slightly more than on its normal biggest day, Black Friday.
Shares in publicly traded gun makers dropped for a third-straight day.
Shares of Sturm, Ruger & Co. dropped 7.7 percent to close at $40.60. They’re down almost 11 percent since Thursday, the day before the shooting. Shares of Smith & Wesson Holding Corp. fell 10 percent to $7.79 — down almost 15 percent from their Thursday close.
Outdoor goods retailer Cabela’s Inc. fell almost 6 percent to close at $38.77. A spokesman for Cabela’s did not immediately return requests for comment Tuesday. Bushmaster firearms were listed on the retailer’s website, but one of the guns was listed as “not available for sale at our Connecticut store location.”
Bass Pro Shop’s site showed information about other guns Tuesday but no Bushmaster-brand guns. A spokesman said in an email that the company had made no changes to its website.
The New York Times contributed to this report.
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