Smith & Wesson Holding Corp. led a decline in stocks of firearms makers Monday amid speculation President Barack Obama will try to renew a ban on assault weapons following last week’s elementary school shooting that left 20 children dead.
In New York, Smith & Wesson shares sank 5.2 percent to close at $8.66, after falling 4.3 percent on Friday, the day of the shootings in Connecticut. Sturm Ruger & Co. was down 3.5 percent at $44, after falling 4.5 percent Friday. And Cabela’s Inc., a retailer of hunting gear, guns and ammunition, slumped 6.2 percent to $41.21, after losing 1.1 percent Friday.
The killings by a single gunman armed with two handguns and a semi-automatic rifle have reignited a politically divisive debate over restrictions on firearms. Obama pledged Sunday to use “whatever power” he holds to prevent such tragedies, while Senator Joe Manchin, a West Virginia Democrat backed by the National Rifle Association, said it would be “wrong” to take gun limitations off the table.
“Every time one of these tragic events occurs, there’s certainly a flurry of discussion over whether or not the government may tighten gun control legislation,” Rommel Dionisio, a New York-based analyst at Wedbush Inc., said in a telephone interview. What makes “this particular tragedy maybe a little different from some of the others was the use of what can be considered an assault rifle and certainly the number of children, and the fact that it was very young children."
Obama “intends to get the ball rolling,” said Dionisio, who rates Springfield, Massachusetts-based Smith & Wesson stock neutral.
Everything on Table
In the second-most fatal mass shooting in the U.S., the gunman killed the children, age 6 and 7, as well as six adults.
Manchin said the nation needed to consider gun control measures following the shooting at Sandy Hook Elementary School in Newtown, Connecticut.
“Everything should be on the table,” Manchin, who had just returned from deer hunting with his family, said in an interview on MSNBC. “We need to sit down and have a common- sense discussion and move in a reasonable way.”
During the Oct. 16 presidential debate, Obama broached the idea of renewing a ban on assault weapons that lapsed in 2004, 10 years after it was championed by President Bill Clinton.
The ban included 19 semi-automatic military-style weapons and also outlawed the manufacture and sale of magazines that can feed more than 10 rounds at a time.
A similar ban would have a “noticeable impact” on companies like Smith & Wesson and Sturm Ruger, Dionisio said.
“Up until the actual date that the law took effect, people would be flooding into stores to purchase a certain type of firearm,” he said. “But then of course, it would be banned.”
Smith & Wesson relied on sales of firearms for more 96 percent of its revenue in fiscal 2012, according to data compiled by Bloomberg. The stock had more than doubled this year through last week, while Southport, Connecticut-based Sturm Ruger had gained 36 percent. Both make handguns as well as rifles that include semi-automatic models. Cabela’s stock had risen 73 percent this year through last week.
Representatives from the three companies didn’t immediately return phone messages seeking comment.
Authorities found a Bushmaster semi-automatic rifle inside the school after the massacre, Connecticut State Police Lieutenant Paul Vance said Sunday. The rifle is made by Freedom Group, which is owned by private-equity firm Cerberus Capital Management LP.
Senator Dianne Feinstein, a California Democrat who sponsored the original ban in 1994, said Sunday that she will introduce legislation outlawing assault weapons on the first day of a new Congress in January.
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