The Sparrow Project, an activist media group, published a report last week alleging that two asset management companies, Owl Creek and Impala, seized on the December Sandy Hook massacre as an opportunity to profit from gun sales.
The Sparrow Project cites a Feb. 14 Bloomberg report on Owl Creek Asset Management’s disclosure of a 2.4 percent stake in Smith & Wesson Holding Corp., the manufacturer of assault weapons linked to more shootings than just Sandy Hook. At a time when many traders were divesting from the gun trade for political reasons, Owl Creek’s Jeffrey Altman and Impala’s Robert Bishop apparently bought in. Referring to the Bloomberg article, Salon’s Natasha Lennard writes, “Although the precise date of the acquisition is not known, the implication is that the investment was made days after the massacre.”
So far, Altman’s and Bishop’s investment, rather than bringing political heat, have turned out to be quite lucrative. Due to public horror at the carnage that Adam Lanza’s Smith & Wesson AR-15 was capable of, the company’s stock dropped 18 percent by the Tuesday after the deadly elementary school shooting. But this only helps explain how savvy assets managers Altman and Bishop made a profit in the millions of dollars. By the last quarterly report this March, Smith & Wesson’s earnings rose from their December low to more than triple in value.
The turn-around was predictable. According to Forbes, the same thing occurred at the end of the summer of 2012 when two mass shootings prompted rapid growth in the gun industry. “A shooting claims a great deal of lives, fear increases that anti-gun legislation will follow and folks promptly head out to stock up,” writes Forbes’ Abram Brown.
Investors aware of this trend have only to interpret the numbers and buy low, sell high. This is precisely what Altman did, as the Sparrow Project explains:
Altman, on-or-around Tuesday December 18th, paid approximately $12,590,977 to acquire 1,616,300 shares of SWHC [Smith & Wesson], the supposition being that it was only a matter of time until the national debate over gun control—reinvigorated by the tragedy at Sandy Hook—would trigger an avalanche of gun sales, specifically at-risk guns like SWHC’s AR-15. In practice, Altman’s morally bankrupt process has already turned a profit. Should Altman decide to sell his stake today, he could receive approximately $14,886,123, which would pay out an approximate profit of $2,295,146.
There are no legal restrictions on profiteering off tragedies like Sandy Hook, but the Sparrow Project is urging action against Owl Creek and Impala. Demanding “nothing short of a complete sale of their positions in SWHC & RGR with any profits made from their sales donated to the families of Sandy Hook victims,” the Sparrow Project provides the phone numbers of the offenders and their enablers with some inspiration for what to ask and how to ask it (politely, of course).
Activists might also find this to be an opportune moment to secure a stake in the anti-gun violence movement. Though gun-makers’ profits are currently cresting, Wall Street investors are aware that they face an uncertain future. Although “[f]undamentals look fantastic for fiscal-year 2013,” declares the financial website Seeking Alpha, “The risk remains that some sort of event will occur that could damage gun demand or lead the government to enact new regulations.”
A shorter version of this story appeared on InTheseTimes.com on March 18, 2013.