Michael Fifer, the chief executive officer of Sturm, Ruger & Co., had excellent news to impart to his shareholders this week. Sales at the Southport, Conn., gun manufacturer were up a handsome 19% in the quarter ended July 2, compared from a year earlier, and profit per share was up 34%.
But a cloud is darkening the company’s destiny, Fifer cautioned during a conference call about the earnings report: politics. Put simply, the 2nd Amendment guaranteeing gun rights is under attack by a certain “nominee of a major political party” who is “actively campaigning against the lawful commerce in arms.” He didn’t have to mention Hillary Clinton by name; his audience understood the reference and it was made even clearer during the Q&A portion of the call.
We hope this call to action inspires our customers and all freedom-loving Americans to take action in support of the 2nd Amendment.
His words, moreover, were very carefully chosen: they were an explicit reference to PLACA, the “Protection of Lawful Commerce in Arms Act,” the 2005 federal law championed by the National Rifle Assn. that limits liability for gun makers and sellers whose products get used in a crime.
Sturm, Ruger already had announced a $5-million grant to the NRA to support its campaigns against gun control. Fifer laid out the details during the conference call: it’s a challenge grant through which the company will donate two dollars to the NRA’s lobbying effort for every gun it sells between now and the November elections, up to the $5-million maximum.
“We hope this call to action inspires our customers and all freedom-loving Americans to take action in support of the 2nd Amendment,” Fifer said. “I have no doubt about it, the makeup of the Supreme Court is on the ballot this November, and therefore, the 2nd Amendment is also firmly on the ballot.” This year’s elections, he said, “will affect our firearm rights for decades to come.”
One can hardly blame a gun manufacturer CEO for sticking his oar in about gun policy, any more than one can blame an oil-company CEO for praising the contribution of fossil fuels to civilization or, for that matter, a dog for drinking out of a toilet.
Nor is it news that Sturm, Ruger would seek to exploit panic over gun control in order to sell more guns. After all, the stunt has worked in the past: gun sales always spike up when political leaders talk about tightening gun laws.
Indeed, investors sometimes experience a frisson of optimism after a major gun attack, presumably reckoning that the attack will inspire calls for gun control and therefore a surge in sales. Sturm, Ruger’s stock price leaped by 8.5% on Monday, June 14, the first trading day after the nightclub massacre in Orlando, Fla. Its shares did shed nearly 10% in the days after the December 2012 shooting at Sandy Hook Elementary School, which took place about 25 miles from its headquarters. But they recovered smartly by the first week of January. In fact, at $67.10 as of this writing, the shares are about 54% higher than they were the day before Sandy Hook.
You won’t hear anything of the kind from Sturm, Ruger. Asked during the call if mass shootings like Orlando have much impact on sales, Fifer said, with evident relief, “It didn’t appear to have a material impact. Our distributors I think reported to us that they got some calls the next day, but it quickly died down.” Move along, he seemed to be saying. Nothing to see here.
As for Clinton’s position on gun control, Fifer overstated it just a bit, but got most of it right. During her acceptance speech at the Democratic National Convention last week, she stated explicitly, “I’m not here to repeal the 2nd Amendment. I’m not here to take away your guns.” But she spoke up for tighter background checks and other such “common-sense reforms [to] keep guns out of the hands of criminals, terrorists and all others who would do us harm.”
Still, it’s reasonable to assume, as Fifer did, that as president, Clinton would appoint Supreme Court justices with a more refined view of the 2nd Amendment than the most recent gun-control ruling. That’s the Court’s 2008 decision in District of Columbia vs. Heller, which upended a nearly seven-decade precedent treating the 2nd Amendment’s “right to bear arms” as applicable to the formation of state militias, not as a bar to regulation of individual gun rights.
The 5-4 opinion in Heller, which was written by the late Justice Antonin Scalia, is the basis for the spread of state open-carry laws and other hands-off gun measures nationwide. It was highly controversial at the time — Justice John Paul Stevens, writing for the dissenting minority, called Scalia’s interpretation “strained and unpersuasive” and the majority’s reasoning in overturning the precedent “feeble.” But it was locked into law by the conservative majority that prevailed until Scalia’s death this year.
Fifer was correct in observing that Clinton has said she thinks “the Supreme Court got it wrong in the Heller case.” She’s made it clear that she considers the case was “wrongly decided” and should be overturned. He calls her position on Heller as nominee “unprecedented,” which is a bit over the top, since Heller has only existed since 2008 and itself marked the end of a precedent that had existed since 1939.
To Sturm, Ruger and its executives, the prospect of a Clinton presidency might well look like a threat to their interest. But what does that say about the public interest?