The California Public Employees’ Retirement System, the largest U.S. pension, has about $5 million invested in two gun manufacturers that would be sold under a divestiture proposal spurred by recent mass shootings.
The $254.2 billion fund didn’t name the companies in a report to its governing board yesterday. It owned 196,664 shares of Smith & Wesson Holding Corp. (SWHC:US) and 116,594 Sturm Ruger & Co. (RGR:US) shares, as of Dec. 31, according to data compiled by Bloomberg. The companies are the biggest publicly traded U.S. gunmakers. Both stakes were increased in the past quarter, the data show.
The pension’s administration board plans to consider a recommendation by state Treasurer Bill Lockyer, a member of the governing panel, to divest holdings in companies that make weapons prohibited in California. The state bans some types of firearms and ammunition magazines that hold more than 10 rounds. The California State Teachers’ Retirement System (A0:US) decided last month to begin selling its stakes in gunmakers.
“Divestment from the makers of these products complies with the board’s fiduciary duty and its investment policy, which specifically allows divestment from manufacturers of products that endanger public health,” Lockyer said about planned sales by Calstrs, as the teachers fund is known.
The move was imitated by public funds across the U.S. in the wake of the Dec. 14 killings of 20 children and six educators at the Sandy Hook Elementary School in Newtown, Connecticut.
Elizabeth Sharp of Smith & Wesson (SWHC:US) said by e-mail that the company has responded to the fund’s request for information. Kevin Reid of Sturm Ruger (RGR:US) didn’t respond to messages left by telephone and e-mail seeking comment on fund divestitures.
The teachers plan, the second biggest U.S. pension with a market value of $158 billion, had $2.9 million invested in Smith & Wesson and Sturm Ruger, through index funds, when it decided to divest such holdings.
The pension also held a stake in New York-based Cerberus Capital Management LP. The private-equity firm owned Freedom Group Inc., the maker of the Bushmaster AR-15 rifle that police said was the primary weapon in the Sandy Hook attack.
The shooting, the second deadliest in U.S. history, ignited a national debate over gun-control laws and stricter bans on semiautomatic weapons such as the AR-15. California specifically bans the Bushmaster.
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