The massacre in Newtown, Connecticut is being referred to as a tipping point for gun control in America. There is almost no way to discuss this subject without infuriating those who are in favor of the gun trade or those who are vehemently against guns. We are not taking any political stance here and the observation is merely a continuation of what we already have reported on before this tragedy unfolded last Friday.
If you do a search under the term “gun control” on Google, there are some 7.7 million search results. If you narrow that down to the last week that figure is some 202,000. In Google Trends, the term “Sandy Hook victims” generated 200,000+ searches and the term “Fashion Island shooting” on Google generated 100,000+ searches this last Saturday alone. The term “Adam Lanza” generated 10,000,000+ search results on Friday. While the term “NRA” generated 100,000+ searches on Google last Friday, so did the term “Columbine.”
With Mayor Bloomberg and others calling for much more action against the sale of firearms, the fight for and against gun control probably will only become louder and louder in the coming weeks. President Obama was very careful in his speech in Newtown on Sunday evening not to use directly inflammatory words, but the writing is on the wall when you consider how access to buying guns is such a divisive topic that often transcends lines typically labeled as Democrat or Republican.
So, if you are wanting to know if the gun industry is scared, all you have to do is look at the stocks in the sector. Sturm, Ruger & Co. Inc. (NYSE: RGR) shares are down by more than 1% on Monday to $44.98 so far, but that is after a 4.5% drop on Friday when the tragedy actually took place. Smith & Wesson Holding Corp. (NASDAQ: SWHC) is down more than 3% at $8.84 so far on Monday, and that is after a 4.3% decline on Friday. If you back these off of the 52-week highs, Sturm Ruger is down just over 25% and Smith & Wesson is now down more than 21%.
We recently called a peak in the stocks around the gun trade, or at least the peak of the rush to chase those stocks. Jim Oberweis of the Oberweis Funds also recently told Fortune that his Sell candidate was none other than Smith & Wesson. He said that it and Strum Ruger soared in 2012 based on tougher Obama gun legislation and sales, and the report said that the gun trade (in stocks) has run its course.
The carnage does not stop there. Cabela’s Inc. (NYSE: CAB) is well known for its hunting, fishing and camping retail efforts. This is down almost 3% at $42.71 so far on Monday after a 1% drop on Friday.
Alliant Techsystems Inc. (NYSE: ATK) has so far been insulated from the trading patterns seen elsewhere. This may be one to consider as well with some risks, even if it is generally considered a defense contractor. It is the largest maker of bullets for law enforcement, defense and for sport-shooting with ammunition brands such as Federal Premium, Alliant Powder, RCBS, CCI, Fusion, Speer Ammo, Speer Bullets, Estate Cartridge and Blazer.
This topic of gun control is highly controversial and tends to inflame the people who are on both sides of the case. Either way, our job is not to preach to one side or the other. That being said, we can only expect that both sides for and against gun control are going to get more vocal.
JON C. OGG