By Noel RandewichSAN FRANCISCO, Feb 28 (Reuters) - For years, the shares ofgunmakers have tended to climb in the wake of mass shootings,but the second-deadliest shooting at a public school in U.S.history may have changed that.Since the killing of 17 students and staff at MarjoryStoneman Douglas high school in Parkland, Florida, on Feb. 14,there has been an outpouring of calls for gun control measures.And the shares of firearms makers Sturm Ruger & Company and American Outdoor Brands , the maker of Smith &Wesson, have slumped more than 14 percent.
On Wednesday, Sturm Ruger fell 6.6 percent and AmericanOutdoor Brands fell 3.2 percent after Dick's Sporting Goods,which sells their firearms, said it would permanently halt salesof assault-style rifles like the AR-15 used at Stoneman Douglas.The school shooting reignited a fierce debate over gunsafety. Protests by social media-saavy student activists andcalls for company boycotts have grabbed the national spotlight,while rattling large money management companies that own sharesin gunmakers like never before.
BlackRock, the largest shareholder in both American OutdoorBrands and Sturm Ruger, last week announced it would speak withmanufacturers and distributors "to understand their response" toParkland. "That has prompted concern within the investment communitythat there could be some changes, and that has resulted in somenear-term selling pressure," said Aegis Capital analyst RommelDionisio, who covers firearms makers.
Wall Street rewarded Dick's Sporting Goods with a 0.69percent price increase after the retailer said it would stopselling assault-style rifles and high-capacity magazines, andthat it would not sell any guns to people under 21. The recent sell-off in gun stocks represents a break fromshare moves following other mass shootings in recent years.Calls for stricter regulations following many of those shootingspushed firearm stocks higher due to expectations that peoplemight stock up on guns in anticipation of stricter rules.After the deaths of 14 people in a shooting in SanBernardino, California, in 2015, America Outdoor Brands' stocksurged 25 percent over five sessions. After a gunman killed 49people at the Pulse Nightclub in Orlando, Florida, in 2016, thestock rallied 14 percent over five sessions.Not all mass shootings in recent years have been positivefor gun stocks, however. After a man killed 26 people, including20 children, at Sandy Hook Elementary School in Newtown,Connecticut, in December 2012, American Outdoor Brands fell 13percent in five sessions.
YOUTH-LED WAVEFederal Bureau of Investigation background checks - anindustry proxy for U.S. gun sales - hit a record high thatmonth, and America Outdoor Brands' stock recovered its losses inJanuary.
Expectations of new gun control measures grew more asDemocratic candidate Hillary Clinton appeared likely to win the2016 U.S. presidential election. That helped propel AmericanOutdoor Brands' stock to a record high.But following the election victory of Republican DonaldTrump, who opposed gun control, expectations of regulation fell.American Outdoor Brands has lost half of its stock market valueunder Trump, while Sturm Ruger has fallen 16 percent.
The Springfield, Massachusetts company, whose stock rose theday after the most recent Florida shooting before steadilytracking lower, is expected to show a 26 percent slump inrevenue when it provides its January-quarter report after thebell on Thursday.Following a youth-led wave of protests, along with proposalsfrom state and national officials to pass stricter regulations,investment heavyweight Blackstone Group last weekend asked fundsit invests in for details about their stakes in companies thatmanufacture or sell guns, according to the Wall Street Journal.
Adding to the pressure, New Jersey legislators have saidthey plan to introduce bills to bar state pension funds frominvesting in gun manufacturers. While gunmakers' shares have been hurt by investors' andcompanies' responses to recent calls for gun regulation, salesof assault-style rifles might be up, following the pattern seenso often in the past.
R&R Gun Shop in Sebastian, Florida, in recent days has soldout of its AR-15s, said co-owner Roberta Wilson.
"Everyone wants one because they're afraid they're going toban them," Wilson said. "We can't get any."<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^Less good for gunmakers ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Noel RandewichEditing by Tom Brown)
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