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Cerberus Capital selling largest firearm manufacturer

Discussion in 'General Gun Discussions' started by gunnutery, Dec 18, 2012.

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  1. gunnutery

    gunnutery Member

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    Cerberus to sell Freedom Group

    Just saw this on thefirearmblog.com and thought I'd share.

    http://www.thefirearmblog.com/blog/2012/12/18/breaking-news-cerberus-to-sell-freedom-group/

    I'd obviously heard of Cerberus and knew they had part in a huge conglomeration of gun manufacturers, but I never really bothered getting into the politics of it.

    The timing of the sale (or potential sale) couldn't be more telling. I guess I just don't understand why an corporation would invest in gun companies in the first place if they're just going to get squeemish when someone abuses a gun. I mean, if I invest in a LARGE group of specific type of companies, wouldn't you want to stand behind that industry when the heat rises?

    According to a commenter on the blog, a large California teacher's retirement fund had been invested into Cerberus and quite possibly divested (or threatened to, not sure) over the ownership/investment.

    Thoughts, concerns?
     
  2. Derek Zeanah

    Derek Zeanah System Administrator Staff Member

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    Due to bad PR (apparently), the holding company that holds the Freedom Group (Remington, Bushmaster, DPMS, Marlin, some others) announced this morning that they're selling the Freedom Group.

    Don't know more -- have been dealing with server issues all morning.
     
  3. Mot45acp

    Mot45acp Member

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  4. HarcyPervin

    HarcyPervin Member

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    They announced the sale of their interest yesterday after CalSTARS announced that they would be reviewing and possibly making changes to how they're investing with the company.
     
  5. GEM

    GEM Moderator Staff Member

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  6. bobbo

    bobbo Member.

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    I hope Marlin and Remington are bought by a decent firm that will go back to core strengths -- quality and decent prices.

    I'm glad they're out. Cerberus (they didn't know what the name meant when the firm started, btw) was fantastic at that coupe de grase with Chrysler after Daimler gave it the old "in-out" over a barrel.
     
  7. mljdeckard

    mljdeckard Member

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    I concur with #3.
     
  8. raz-0

    raz-0 Member

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    I'm fascinated by the spin. Cerberus could care less about morals. They had a profitable entity that could be obsolete tomorrow, or could grow to be too large a portion of their portfolio if investments pulled out over it.

    They basically said we aren't going to play the role of congress, but we are going to hedge against losses.
     
  9. Frank Ettin

    Frank Ettin Moderator

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    They're an investment management business. That's what they're supposed to do.
     
  10. Sky

    Sky Member

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    Buy high sell low?? Insider trading??

    I am more concerned about the insider trading thingy.
     
  11. USAF_Vet

    USAF_Vet Member

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    It's only insider trading if its done by civilians. Congress gets away with it daily.

    Hopefully someone buys them and starts producing quality guns again.
     
  12. Atbat82

    Atbat82 Member

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    It's a risk management play. They are hedging against future legislation, but also against investor blowback. Keep in mind Cerberus makes money based on total Assets Under Management. If a large pension (e.g. New York) pulls out, Cerberus loses management fee income. Add in the potential for financial underperformance of Freedom Group and this looks like a smart play.

    Of course, the media is going to have a field day with the announcement.


    Sent from my iPhone
     
  13. wojownik

    wojownik Member

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    Cerberus is an investment capital group, pure and simple. And this is about numbers and cash flow in their portfolio.

    They have no particular passion for this business, and are getting spooked by the perceived risks to the bottom line.

    That Cerberus Managment statement was pathetic - and I mean that as someone who has worked in the investment banking industry. Yes, they came in as a financial investor in Freedom Group, but nowhere in that statement did they express any concern, interest or even support for the businesses under Freedom Group, or their employees, distributors or customers ...

    They rolled up a number of businesses, in part to synergize, in part to make a more attractive bundle to spin off at some point. They are likely making the calculation that the risk of additional legislation would sufficiently impact the businesses as to make them too risky / less attractive to hold onto. Hence an early exit. I can understand the calculation.

    So, they are they type of short term investors who are willing to dump and run rather than tough it out through a down cycle, or face a potential challenge to reinvent their businesses. And they are not the smart type of investor who would take at least a sentence to note the value of the portolio they are divesting.
     
  14. lefteyedom

    lefteyedom Member

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    If you want loyalty get a dog
     
  15. raz-0

    raz-0 Member

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    That's kind of my point. They didn't change the policies of the held company, or what they manufacture, or dissolve it and sell it off. They are simply unloading it.

    All in all, it's a relatively neutral act given the nature of the parent company.
     
  16. Pilot

    Pilot Member

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    They know they will get top dollar as the climate for gun sales is at an all time high. Purely business.
     
  17. USAF_Vet

    USAF_Vet Member

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    When they pass laws that affect us and not them, no, I don't consider them civilians. They sure as hell don't consider themselves civilians, either.
     
  18. BobTheTomato

    BobTheTomato Member

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    If they sold it means that someone else bought the shares they sold. Shares dont just disappear. (Unless there is a share buyback) These are also the mental giants who sunk millions into Chrysler.
     
  19. Wes B

    Wes B Member

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    Heck, lets start a collection and buy it.

    Might get a good deal :what:
     
  20. buckeye8

    buckeye8 Member

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    Not to be too 'tin foil hat' or anything, but when I heard about this, my first thought was "I wonder if Cerberus management has heard from well-connected sources that the firearms industry is about to suffer".

    Not saying I have any reason for saying so, but it is a little bit of a disturbing thought. Obviously, these guys are more 'in the know' than most of us are. Hope this isn't a bad sign...
     
  21. RX-178

    RX-178 Member

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    The risks just went up, but they can still get a great return on investment if they sell it now. Doesn't seem suspicious to me in the least.
     
  22. Sheepdog1968

    Sheepdog1968 Member

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    I hope Marlin moves back to their original manufacturing site and hires back the skilled craftsman.
     
  23. fanchisimo

    fanchisimo Member

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    I would hope that an American company buys the companies just to keep in the US. I am thinking inside the tinfoil hat that Obama with Govt money would but to just shut them down, run them into the ground, or be a govt-run corporation. One of the deals that he was trying to get to avoid the fiscal cliff is to remove the debt ceiling and thus have a blank check.
     
  24. Texan Scott

    Texan Scott Member

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    Maybe Marlin will be bought out by a RIFLE MAKER!
     
  25. TexasBill

    TexasBill Member

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    Don't kid yourself, Bob, Cerberus made out like the proverbial bandit, even though they gave up Chrysler. The company really wanted General Motors Acceptance Corporation (called Ally these days) and Chrysler Financial. By the time the dust settled, Cerberus made billions from the dealings.

    Plus, they got a sweetheart deal from Daimler when they took Chrysler off Zetsche's hands.

    It's interesting to note that the same guy who nearly destroyed Home Depot and gutted Chrysler to the point it no longer had enough money or employees to develop new product was in charge of Freedom Group. Good ol' Bob Nardelli. Maybe that's one of the big reasons for the general dissatisfaction with Marlin and Remington guns.
     
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