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Gun Stocks Resilient as Pressures Build

The New York City Teachers Retirement System had previously divested its weapons stocks holdings.

While the stocks of manufacturers and retailers of publicly available weapons would seem to be vulnerable to tragedies like the Newtown, Conn. shooting and to subsequent public outcry and pressure from large investors, the stocks themselves tell a different story.

In the wake of Newtown in December and the shooting in a movie theater in Aurora, Colo. six months earlier, investors' initial revulsion sent the stocks only slightly lower. In short order, the cheap prices attracted buyers and they rose again, in some cases to new highs.

The chart below, for instance, shows Smith & Wesson's activity across the time threshold of the July 20 Aurora event. Police believe the shooter in that case used a Smith & Wesson .223-caliber AR-15-type assault rifle equipped with a 100-round drum large capacity ammunition magazine. A similar weapon, made by Bushmaster, was used in the Newtown shooting.

SWHC Chart SWHC data by YCharts

The post-Newtown disgust with weapons stocks was more pronounced, and Smith & Wesson remains down over 20% from its highs immediately prior. Meanwhile, retailers and ammo stocks have felt barely a ripple. The following chart compares SWHC with sporting good retailer Cabelas ( CAB) and ammo-maker Alliant Techsystems over a six-month period surrounding the Newtown date of Dec. 14.

SWHC Chart SWHC data by YCharts

The announcement of NYCERS divestiture meanwhile had little or no impact on trading Wednesday, with shares of ATK and SWHC closing down only slightly and OLN up 1.6%.

Given the resiliency of these stocks and the limited scope of the measures the Senate was considering, the potential impact from any Senate initiative would seem to be limited.

-- Written by Carlton Wilkinson
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SYM TRADE IT LAST %CHG
ATK $0.00 0.00%
CAB $44.93 2.84%
OLN $22.47 0.31%
RGR $59.56 3.96%
SWHC $15.79 1.41%

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Chart of I:DJI
DOW 17,550.69 -47.51 -0.27%
S&P 500 2,093.32 -4.72 -0.22%
NASDAQ 5,105.5460 -9.8360 -0.19%

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