Cerberus Began Mulling Gunmaker Sale Friday

Dec 19 2012 | 12:41pm ET

Cerberus Capital Management began weighing the sale of its gunmaker within hours of last week's shootings at a Connecticut elementary school.

Shortly after the news broke that a gunman had killed 20 children, six adults and himself at the Newtown, Conn., school—possibly before they even knew that the shooter, Adam Lanza, had used a gun made by one of its portfolio companies—Cerberus executive met to consider their response to the tragedy, The Wall Street Journal reports. Eventually, Cerberus decided to sell Freedom Group, the gunmaker, announcing its decision yesterday.

The New York-based private equity giant spent the weekend discussing what to do; Freedom Holdings is among the largest gunmakers in the country; Cerberus created the company in 2007 when it merged several other firearms manufacturers it owned, including Bushmaster Firearms International—the brand of the rifle Lanza used—and Remington Arms.

Cerberus, led by avid hunter Stephen Feinberg, believes that Freedom is an important supplier to law enforcement and military personnel. It also believed the company is a good investment. But by Monday night, Feinberg had decided to sell.

He called Freedom Group CEO George Kollitides, a former Cerberus executive, to break the news. Kollitides then told Freedom Group's board that Cerberus hopes the sale would keep the firm out of the spotlight of the expected debate on gun control, a sentiment that Cerberus also expressed in its press release yesterday.

Cerberus also hopes the move will mollify any concerns investors might have; one, the California State Teachers' Retirement System, which has $500 million committed to Cerberus, said it had begun a review of its relationship with the private equity firm in the wake of the massacre.

According to the Journal, Feinberg did not consult with his father, a Newtown resident, before making the call to sell.


In Depth

Q&A: Brevan Howard’s Charlotte Valeur Talks Strategy

Sep 18 2014 | 11:18am ET

Charlotte Valeur chairs the board of Brevan Howard Credit Catalysts, an LSE listed...

Lifestyle

Hedgies Rock Out For Children's Charity

Sep 15 2014 | 8:40am ET

It's that time of year again—when hedgies trade in their spreadsheets for guitars...

Guest Contributor

Volkered: How Financial Sector Reforms are Creating Opportunities for Hedge Funds

Sep 16 2014 | 11:28am ET

New regulations have dramatically curtailed proprietary trading activity in investment...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

September 2014 Cover

The London Whale: Rogue risk management

Credit default swaps brought down the London Whale and cost JPMorgan $6.2 billion. Here is how it happened.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.