Warren Buffett letter: Berkshire gets $29B tax boost but deals are too pricey Investment Club |
- Warren Buffett letter: Berkshire gets $29B tax boost but deals are too pricey
- Stock Market Crash & Put Option Earnings Releases By John Kitover 2.23.1...
- We Are ALL GunOwners. Here is Why.
| Warren Buffett letter: Berkshire gets $29B tax boost but deals are too pricey Posted: 24 Feb 2018 08:37 AM PST
 | ||
| Stock Market Crash & Put Option Earnings Releases By John Kitover 2.23.1... Posted: 23 Feb 2018 03:00 PM PST
 | ||
| We Are ALL GunOwners. Here is Why. Posted: 23 Feb 2018 01:54 PM PST For many Florida teachers, it's an indignity on top of tragedy. Inside their retirement plans, they hold stock in the companies that make the AR-15 rifle, the weapon used to kill 17 of their students and colleagues at Stoneman Douglas High School this month. The $163 billion Florida Retirement Pension Plan had a $4 million stake in gun manufacturers as of Dec. 31. Nearly half of that comes from a low-cost index fund that tracks the broad-based Russell 3000—a perfectly fine investment. A spokesman for Florida's State Board of Administration, which runs the pension plan, told me that it "must act solely in the economic interest" of participants. But looking out for economic interests doesn't have to mean tuning out social ones. Pension funds have long been at the forefront of using their considerable heft to effect change in corporate behavior or outright eschew investing in companies they find problematic. In 2013, the $232 billion California State Teachers' Retirement System, the second-largest public pension, sold its holdings in manufacturers of firearms that are illegal in California. The fund now uses a customized index stripping out these companies. Indexing giants Vanguard and BlackRock (ticker: BLK) are the largest investors in the three major publicly traded gun makers. BlackRock owns 11% of American Outdoor Brands (AOBC), formerly Smith & Wesson, via exchange-traded funds like iShares Russell 2000 (IWM) and iShares U.S. Aerospace & Defense (ITA). Vanguard owns 8%, through its Vanguard Small-Cap index (VSMAX) and Vanguard Total Stock Market index (VTSMX) funds. Together, BlackRock and Vanguard own 26% of Sturm Ruger (RGR), which makes semi-automatic rifles including the AR-15. And they're the No. 2 and No. 3 owners, respectively, of Vista Outdoor (VSTO), with a combined 22% stake. Investors combing through fund holdings could easily miss these positions. The gun companies generate huge controversy, but not much in the way of investor value—the market cap of all three gun stocks combined is just $2.5 billion, a rounding error in the trillions of dollars managed by Vanguard and BlackRock. The gun makers may not matter to asset managers, but the reverse isn't true. The fund giants help keep the stocks of gun makers afloat. I reached out to BlackRock and Vanguard about their role in the gun debate, expecting to get some passionate responses, especially since BlackRock CEO Larry Fink recently wrote to American CEOs that he expects them to not just generate financial returns but also "serve a social purpose" and "make a positive contribution to society." Fink wasn't available to speak this week, according to spokesman Ed Sweeney, who told me the company "will be engaging with weapons manufacturers and distributors to understand their response to recent events." Vanguard is treading carefully, as well: "Mutual fund firms over the years have been called upon to take actions against a wide range of companies, from food manufacturers to energy producers," Vanguard spokesman John Woerth wrote in an e-mail. "We believe it would be exceedingly difficult to manage our funds effectively and efficiently while seeking to address the many social, political, and environmental concerns of 20 million clients." He added that roughly 95% of the firm's 388 funds don't invest in companies involved in gun manufacturing. INVESTORS HAVE FOUND WAYS to push for societal change in the past, most notably with the antiapartheid divestment campaign in the 1980s. Divestments are trickier in the age of passive investing, but not impossible. Before the 2012 Sandy Hook elementary school shooting, the amount of institutional money that excluded weapon makers sat at about $74 billion; it had ballooned to $845 billion by 2016, according to the Forum for Sustainable and Responsible Investment. But responsible investing veteran John Streur, who heads Calvert Research & Management, says divesting may not work in curbing gun violence. "It has to involve more than just not owning—obviously, that's not working," he says. He's mulling new ways to tackle the problem, but says it requires a broad swath of Corporate America, potentially encouraging other companies to use their lobbying power to weigh in on gun safety. Fund firms have a direct line to the gun makers, even if the gun companies won't pick up the phone—Sturm Ruger even states on its website that it doesn't take meetings with individual investors, and none of the companies would speak to Barron's. But public companies can't ignore shareholders, who can sponsor resolutions and vote against existing management. The big index firms historically have not supported much in the way of shareholder resolutions, saying they prefer behind-the-scenes discussions. The trouble is, it's hard to gauge their progress—or how hard they're pushing. One rare example: BlackRock, Vanguard, and State Street Global Advisors recently joined a shareholder mini-rebellion at Exxon Mobil (XOM) after years of engagement around climate disclosures proved futile. Last year, a climate resolution won 62% of the vote at Exxon's annual meeting. The fund giants could take similar steps to encourage gun makers to examine their role in preventing gun violence. Here are two ideas to start: Gun makers could follow pharmaceutical companies, which have stopped selling opioids to pharmacies with suspicious ordering patterns. The gun companies could also embrace safety devices or smart-gun technology. Investors actually undermined that effort in 2000, when Smith & Wesson began work on smart-gun technology and voluntarily agreed to restrictions on how it made and sold guns: The National Rifle Association called for a boycott, which decimated sales. Rather than acknowledging that the company was changing its business in a way that could help it in the long run, investors bailed. The stock fell 95% by year end. This time, investors have a chance at getting things right. [link] [comments]  |
| You are subscribed to email updates from Don't forget rule #1.. To stop receiving these emails, you may unsubscribe now. | Email delivery powered by Google |
| Google, 1600 Amphitheatre Parkway, Mountain View, CA 94043, United States | |
No comments:
Post a Comment