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Gun-makers see ballistic pull to divest stock

The mass shooting incident at Marjory Stoneman Douglas High School in Florida has left the country in grief. Debates on gun control are up again.

There is a pattern following these types of events. Buyers try to purchase as many firearms as they can before restrictions are implemented. This would usually lead to an increase in stocks of gun companies.

It seems like things are about to change, though. There haven’t been any significant changes in gun laws since 2016, and there appears to be little chance now. Some analysts believe that over time investors will see that chances of gun regulation are low, at least in the near future.

Top financial firms like BlackRock and Vanguard are major shareholders in the biggest gun producers as well as sellers. BlackRock owns stakes in American Outdoor Brands, Sturm Ruger, and Orbital ATK. Both BlackRock and Vanguard have stakes in Dick’s Sporting Goods.

Courtesy: Smith & Wesson Corp.

However, in the wake of increased tragedies, the push for gun control becomes only stronger. This puts gun companies in a tough situation. In the past two years, American Outdoor and Sturm Ruger have seen decreases in value. Remington, meanwhile, is looking to seek bankruptcy protection. Many retailers are not ordering firearms as they deal with excess inventory.

There are increased calls for divestment of gun stocks, as investing in a socially responsible way is gaining much favor in present times. There has been pressure on oil, nuclear energy, and tobacco products companies as well.

In any case, these changes are unlikely to happen overnight.

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