Barack Obama might seem an unlikely investor in the firearms industry. But the US president, a fierce advocate for gun regulation, has money in a pension fund that holds stock in gun and ammunition companies.
Although Obama’s stake is minuscule, worth no more than $30, it reflects a much larger surge of investment.
The president is among millions of Americans buying into gun companies - often unwittingly - as mutual funds have increased such holdings to record levels, according to a Reuters analysis of institutional investment in firearms companies.
Since Obama was elected in 2009, mutual funds have raised their stakes to about $510m from $30m in the nation’s two largest gun manufacturers with publicly traded shares, Smith & Wesson Corp (SWHC.O) and Sturm, Ruger & Co (RGR.N). That means such stocks are now common in retirement and college savings plans.
The influx has helped to boost both companies’ shares by more than 750 percent during the Obama presidency; each now has a market value of about $1 billion.
Beyond mutual funds, such investments also are held in the portfolios of hedge funds and public pension plans, which are harder to track.
The White House declined to comment on Obama’s holdings in the Illinois General Assembly’s pension plan, which he earned while serving in that state’s senate. The president has disclosed between $50,000 and $100,000 in the plan.
Other indirect investors in firearms companies include advocates for gun regulation in the US Congress and several parents of children who attended Sandy Hook Elementary School in Connecticut - site of the 2012 massacre of 20 students and six staff members.
Small stakes, big impact
Obama and his tiny stake are typical of most Americans with holdings in firearms investments: They are invested in funds that buy shares of the relatively small part of the firearms industry that is publicly traded. But collectively, their investments are a boon to the gun industry and amount to a sizable stake in major gun and ammo makers.
For some gun safety advocates, the amounts are less important than the principle. Po Murray, who put four children through Sandy Hook Elementary, has also struggled to determine whether her investments include firearms companies.
“It’s a real surprise: You find out you could be invested indirectly in Smith & Wesson,” said Murray, who chairs the Newtown Action Alliance, a gun safety group. “I don’t want to be invested in gun companies.”
The $16 billion Illinois pension fund that includes Obama’s investment holds at least $4.8m in shares of gun industry stocks, including Smith & Wesson, Ruger, Vista and ammunition maker Olin Corp (OLN.N).
Until 2014, the pension fund owned about $1.5m of the debt of Remington Outdoors, another gun manufacturer. Remington did not respond to requests for comment.
The Illinois pension plan also invests in at least one mutual fund with gun industry exposure. The $1.1 billion Templeton Global Smaller Companies Fund owned $9.5m of Smith & Wesson stock at the end of December, fund disclosures show.
Obama and other plan participants have no say in how the money is invested. That’s controlled by the Illinois State Board of Investment, which said it has no policy on investing in firearm and ammo companies.
In its analysis, Reuters used mutual fund holdings data from Morningstar and Lipper Inc, a Thomson Reuters company, to examine firearms investments during the Obama presidency.
The list of funds holding such stocks includes some of the biggest and most prominent, such as Vanguard and the second-largest fund group, Fidelity Investments. It extends to BlackRock Inc (BLK.N), and Dimensional Fund Advisors. The analysis is based on disclosures made by individual funds.
Some of the gun stockholders are passively managed index funds. But many are actively managed, such as Fidelity’s $40 billion Low-Priced Stock Fund (FLPSX.O), which has become Smith & Wesson’s second-largest mutual fund investor under storied stock-picker Joel Tillinghast. The fund held about 1.1 million shares worth $20m as of October 31, according to fund disclosures.
Gun investments in congress
Obama isn’t the only gun-regulation advocate with gun-industry holdings.
Former congresswoman Carolyn McCarthy - elected after her husband was killed in the 1993 Long Island Rail Road shooting - pushed relentlessly for gun safety legislation. While in office, she held shares worth between $3,003 and $45,000 in at least three exchange-traded funds with stakes in gun and ammo companies, according to her last financial disclosure before retiring last year. She also invested between $2,002 and $30,000 for two grandchildren in so-called 529 college-savings plans that include a Vanguard fund holding firearms stocks, disclosures show. The New York Democrat could not be reached for comment.
As a federal retirement benefit, members of the US Congress can participate in a Thrift Savings Plan, which offers an investment option - the S Fund - that holds stock in firearms companies.
Financial disclosures show that S Fund investors include Senator Dick Durbin of Illinois, the second-ranking Senate Democrat and a leading advocate for stricter background checks for gun buyers. Durbin disclosed an S Fund investment of about $115,000. However, Durbin’s office declined to comment. And some members of Congress welcome the investment option.
