Firearms mutual fund?

[Brett Bellmore]

I've got an idea I'd like to run past any financial types here: How difficult would it be to create a "socially conscious" mutual fund which specializes in buying firearms related companies? To keep them from falling into the hands of anti-gunners, as has evidentally happened with Colt?

I know it's done with other social causes, like the enviromental movement, so I can't see any obvious problems. Strikes me that some guy out there could make a decent income managing such a fund, and strike a blow for the RKBA as well. Certainly I'd be glad to invest part of my retirement fund in such a mutual fund! I'd be willing to bet that such a fund would amass a huge amount of money relatively quickly, advertising in places like Guns and Ammo, and the American Rifleman.

Any comments?

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Sic semper tyranus!

 

[Bob Locke]

I'm not a "financial type", Brett, but as I posted on the other couple of threads dealing with this matter, I believe firmly that it CAN happen.

All that's needed is commitment.

 

[DC]

Neither am I a financial type...
However, tho I like the idea, it seems that it would be classified a high risk venture...dunno if mutual funds take that type risk.

I say this because I was reading about the possible S&W sale and it was mentioned that the risk of culpibility and potential losses in the US lawsuits makes the sale of S&W dubious in the short term and marginal within a year.

I don't know if "pro"-type investment houses are even allowed to take that type of risk

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"Quis custodiet ipsos custodes" RKBA!

 

[Bob Locke]

I believe that the "risk" factor is the entire point, DC. That's why Brett is talking about setting up a mutual fund strictly for these purposes rather than relying on an already-existing one as a vehicle.

No one should go into this sort of thing expecting to make a mint, but rather to protect and preserve our freedoms. After all, didn't a group of men once pledge their lives, their FORTUNES, and their sacred honor? Why do we believe that we can do less today and enjoy similar freedoms?

There IS a price.

 

[Brett Bellmore]

Bob: Right, if it simply held it's value constant in this enviroment, I'd be happy. Though it's quite possible the companies involved would do well if it caught on; All things being equal, who are you going to buy guns and ammo from, any old company, or one you own a share in? And if we were to prevail on the political front, and beat back this wave of gun control attacks, those stocks probably would appreciate quite a bit; I bet HCI's efforts have pushed their values down substantially.

The point isn't to make money, though, the point is to protect these companies from the ultimate in hostile takeovers, and guarantee stockholder preassure to maintain 2nd amendment friendly policies.

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Sic semper tyranus!

 

[Bulldozer]

I like the idea but one should be very aware of the financial risk you'd be undertaking. Given the potential liability, few investors will be interested in this as an option. It would basically be a vehicle to push our expression of our rights.

Don't count on any support from the financial institutions. Think of where they are located -- NYC.

There are several pro-gun firms we could include in a portfolio, not just gun manufacturers. Perhaps an option could be an investment club of sorts? Anybody know anything of that option?

 

[Jace]

If you are willing to invest money to promote the cause how about setting up a firearm defense fund. The fund would be a loan to the firearm companies as the fight the many court battles facing them.

The gun makers have to take a business apporach to the problem and get out as cheaply as they can. They are more than likely to surrender to the demands than they are to stand for principle.

I believe these lawsuits are a blessing in disguise. The emperical data shows that firearm ownership is a deterence to crime and thus reduces the cost the cities are suing for. If it were to be fought to the end I believe we would win the lawsuit.

Would you be willing to loan a few bucks to the fund to be paid back in money or product after a succesful defense?

 

[Oscar]

Believe it or not, I'm a lawyer that specializes in setting up mutual funds (among other collective investment vehicles). While the intent behind your idea has merit and virtue, federal regulations (Hard to believe I know) would make "making a statement" like this kind of expensive. I can go into great detail if you wish, but the infrastructural costs of setting up a fund that is not limited to millionaire investors are pretty high. Sorry to burst your bubble! It would be cheaper for a bunch of you guys to get togethr and just buy gun and gun-related stocks. If you have any questions, just let me know.

Oscar

P.S. With all the federal flack being directed at gun manufacturers, I'm not all that sure that gun stocks would be money makers these days. So unless you have retirement money to "donate" to the cause, you would be much better off continuing to support the NRA, SAF, etc. (In my humble opinion, of course!

[This message has been edited by Oscar (edited January 04, 2000).]

 

[Brett Bellmore]

Jace: Simply put, a firearms defense fund does us little good, if the gun control movement BUYS gun manufacturers. We're not talking laws here, or lawsuits, we're talking about the free market, and the ability of those who own a firm to dictate it's policies.

What I've proposed is NOT meant to be an all-inclusive defense of our right to keep and bear arms, it's simply a specific defense on what Colt has shown to be a vulnerable flank. We could win every lawsuit, beat back every new gun control law, and even get the old ones repealed, and if the publicly held firearms manufacturers end up being purchased by anti-gunners, we will find ourselves with a very constrained choice of expensive firearms.

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Sic semper tyranus!

 

[Brett Bellmore]

Oscar: Thanks for the info; I had heard that there were such funds for enviromentalists, for instance, and assumed that what THEY could do, we could do too. Are there fewer of us? Are we poorer? But then, maybe we're less devoted to our cause...

I've always assumed that anything invoving government regulation is going to be expensive, and am well aware of the financial pitfalls in store for anyone who invests on any basis besides financial critera. Thought that the fund might at best break even, unless we prevailed on the legal and political fronts.

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Sic semper tyranus!

 

[ctdonath]

With all the federal flack being directed at gun manufacturers, I'm not all that sure that gun stocks would be money makers these days.

Key phrase: these days. Might actually be an excellent time to buy, with prices presumably low due to the oppression. Some of them will survive, and the oppression WILL end at some point (see Prohibition for precident). Just think of how many >10rnd mags will be sold when restrictions are lifted...or how many new MGs...

 

[Oscar]

Brett,
"Socially responsible" funds (such as "green" funds) are in fact pretty common. Unlike this proposed fund, however, they typically just exclude certain stocks that are inconsistent with their "values". Likewise, there are "sector" funds (such as health care, technology, etc.). However, most of those funds concentrate in relatively "attractive" market sectors -- which probably wouldn't describe the gun industry, the tobacco industry or similar "under fire" industries and sectors (pun intended!! ) As an example, many technology funds had mega returns in 1999 (some of the more notable ones over 100%).

Best regards,
Oscar

P.S. CTDonath, Stocks that are "beaten up" often are good "value" plays. However, I'm not altogether sure that the bad news hasn't only just begun for the gun industry. . .

 

[Jace]

Brett, I don't believe you can buy a controling interest in many companies by purchasing common stock share at a time in an open market. I gotta believe that most companies keep at least 51% of the stock in their control. An anti-gun conglomerate could still eat it up by dealing with the controling interest.

The politically correct funds are more of a "feel good" scam for the investors. They don't really gain any control of the companies they have share in. The customer can say he doesn't support ______!

Also, I don't believe that a mutual fund holder has the same voting privilige the stock holder of record does. Who would get to vote, the fund or the individual? Maybe Oscar can help us out with an answer here.

You are right if the anti's end up owning the industry it will be tuff for awhile until someone starts up again. I do like the idea and will be putting firearms companies in my personal portfolio.

I suggest the defense fund as something to do AS WELL AS purchase stock, not instead. I firmly believe we would win the case. It would sure add a lot of credibility to our side. However, I fear the firearms companies will take the business way out.

 

[ernest2]

And now , for a totally fresh take on this thread and subject material.

First of all, you are not going to have
any gun dealers or gun shops left to buy guns from because of insurance companies refusing to insure gun shops or charging so much for the insurance that the gun shops are forced
to raise the price of guns so high to pay the outragious insurance premiums that no one but the wealthy or drug dealers would be able to afford to buy a gun that includes insurance costs.

Because of this, look for 70 % of gun shops to go out of business. The remaining
shops will make full retail price look like
a give away price to a close family member.

To give some background: in 1993, Federally Licensed Gun Dealers in the entire USA numbered 300,000 . In 1996, thanks to the efforts of Bill Klinton & BATF ,only 30,000
remained. 90% or 290,000 FFL gun dealers were put out of business. In 2000, we are reduced to 20,000 gun dealers.

Now, not only does our libility insurance premimiums go through the stratosphere , which is several miles past
the roof; but we and the gun manufacturers
are notified that our insurance will not
pay for private lawyers or provide insurance company lawyers for the court cases.

I wouldnt be suprised if a judgement goes against the firearms industry, that the insureance companies refuse to cover judgement fines.

Because of this ,I do not recommend
investing in a sued firearms company but rather to start up a new and never sued firearms company, which can not yet be responsible for the cost of gun violence,
having never made any guns. The trick with the new company is to insure than none of its guns ever fall into criminal hands.

Fire arm companies do not deal direct
with the customer or even with the gun shop .
Firearm companies deal only with regional distributors of firearms.

What the gun shops really need is for some fund or company to provide us with reasonable product and libility insurance
to keep the price of new guns from costing like smith custom shop x 4.

The increased insurance costs are passed along to the shooters by wholesale price increases by both the manufacturers and the distributors.

Ruger just increased the wholesale cost
of all models in the Ruger Line by $75.oo
across the board, to pay for lawyers fees.

If you guys could put together some kind of insurance fund for gun shops so that the gun shops did not have to tack on increased insurance costs to the firearms and of course the UPS overnite air on all handguns means
instead of paying 12.00 shiping ,you now pay $45.00 shipping , added to the price of your gun.

You will see the effect of UPS handgun rippoff shipping, just as soon as gun shop hand gun stock depleates & you have to start paying the new shipping fees on new hand guns
at the higher mfg. wholesale prices.

Without taking into account the increased gun shop insurance costs and looking at only the effects of ups next day air and increased mfg wholesale due to lawyers fees , at this time, look for all
handguns to increase by $120.oo

As a prediction, if things continue on as they are heading, in 6 to 9 months, look for handguns to increase to $200.oo over current gun shop prices. I see this second price increase of 80.oo per gun as a mfg
wholesale increase, caused by yet more lawyers bills. Keep in mind that I have not yet counted the increased cost of gun shop insurance premiums. But, i can see this as costing 75.00 to 100.oo more per gun.

So, now we have the hand gun increased by 300.oo over current gun shop price.
This is where we might be at the end of 2000,
I might be wrong because I am unable to see all mitigating factors.

I know one thing, the 100.oo single action pot metal pocket pistols are gone for good. Wave by by to Brico,Raven, Jennings,
Loricin & Davis. The couldnt afford the lawyers and went out of business.

Hi-point yet endures but not for long ,I fear.
Well, I have given you some food for thought! I hope it leads you somewheres.
(Probably a trip to the gun dealer before the price goes up,yet again.!)

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Every year,over 2 million Americans use firearms
to preserve life,limb & family.Gun Control Democrats
would prefer that they all die,instead.
ernest2, Conn. CAN opp. "Do What You Can"!
http://thematrix.acmecity.com/digital/237/cansite/can.html

 

[Oscar]

To answer Jace's question, the fund's investment adviser would vote any stocks the fund owns. Such voting rights would NOT be passed through to the fund shareholders. In voting the shares, the fund's adviser would have a fiduciary duty to do what is in the shareholders' best interests. Only if the shareholders' investment interests aligned with a pro-RKBA stance would the adviser be able to vote the shares in that manner. With all the capitulation going on in the gun industry these days, a lot of gun company executives seem to think that shareholder interests -- or perhaps only their own selfish interests -- do not align with a pro-RKBA posture. All in all, I don't think this is a "winning" idea at all, although Brett's heart is definitely in the right place.

Oscar