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JDRFL1 wrote:I heard about this a few months ago. Apparently George Soros owns the parent company to the one you are speaking of or something along those lines.

Nope. That was the Internet rumor; but Soros has nothing at all to do with Cerberus.

PappaGun wrote:As an aside, Cerberus is the firm that owned Chrysler when it failed.

Yep. And the market comparison makes their foray into firearms--one relatively consistent shining light in an otherwise depressed economy--look like that much better a decision.

There's been a a lot of coulda'-shoulda' speculation about Chrysler and the handling after the acquisition, a lot of it focused on former Home Depot CEO Nardelli, picked to run the automaker. But part of the poor gamble turned out to be simply poor timing. Cerberus bought 80% of Chrysler in 2007; by Q4 2008 the economic conditions were starting to be written on the wall. In 2009, almost everybody who wasn't a millionaire stopped buying new cars...and that demographic hadn't been buying Chryslers anyway. Cerberus bought into a cyclical industry a year before the bottom dropped out. Cerberus kept the finance arm of Chrysler, and also owns 51% of GMAC.

On the plus side, Cerberus's operating philosophy, historically, has been "find and hold," not "buy and flip." Chrysler represented some 7.5% of Cerberus's assets under management--and they had/have never gone above 5% otherwise--but the good news for the firearms industry is that Cerberus has deep pockets, Freedom Group represents a much smaller investment, and it is an investment that has been making money.

I still have mixed feelings about so many venerable firearms manufacturers coming under a single corporate umbrella. But at least in the short term I think it also gives us a capital management firm worth about $27 billion that absolutely doesn't want to see the 2A infringed. That would be very bad for a profitable segment of their business; and they may throw lobbying dollars at the issue if it looks like it might be in jeopardy.

Where the business of firearms will be in another five or 10 years from now, who knows? There are historical industry models that tell us one possibility is that manufacturers just north of the bell curve might get absorbed into the large conglomerate (think Smith & Wesson, Mossberg & Sons, Ruger, Kimber) leaving a gap in the "middle class" but without probable disturbance to lower-volume, niche manufacturers.

Actually, I think I'd keep my eye on Europe. The economy of the European Union is walking a tightrope, and if defaults by certain countries pull out the economic drain plugs and make the Euro into a Perot-like giant sucking sound, I think there could be a case for a Cerberus/Freedom Group to look to Europe for its next significant firearms manufacturing acquisitions. I'm thinkin' possibly Italy. Just my crystal ball...but it's broken 99% of the time...

This really isn't new news. Freedom Group is actually the private equity firm Cerberus Capital Management, discussed here on the board four years ago: viewtopic.php?f=23&t=12409" onclick="window.open(this.href);return false;. Cerberus first bought Bushmaster in April 2006, then a variety of transactions brought Cobb Manufacturing, DPMS, Remington, Marlin, Harrington & Richardson, L.C. Smith shotguns, Dakota Arms, and others under the Cerberus umbrella.

All of these companies were brought under one company called Freedom Group. Freedom Group is actually "Remington Arms Company" renamed, so it can claim being founded in 1816; but the Freedom Group we see today doesn't look much like the Remington of 10 years ago (BTW, the corporate address is 870 Remington Drive...I just love that).

In October 2009, SEC filings were made for an intended IPO to take Freedom Group public and to raise an additional $200 million in funding. At the time of the IPO, Cerberus owned a 94.3% stake in Freedom Group...so pretty much the whole frame, slide, and barrel. However, in March of this year a form "RW," or "Application for Withdrawal of Registration Statement," was filed to withdraw their registration statement for an IPO. Freedom Group did not give a reason for the withdrawal, but issued this statement:

At this time the Company has determined not to proceed with the initial public offering contemplated by the Registration Statement. The Registration Statement has not been declared effective by the Commission and the Company hereby confirms that no securities were sold in connection with the offering described in the Registration Statement. Therefore, withdrawal of the Registration Statement is consistent with the public interest and the protection of investors…

There have been several officer and director changes at Freedom Group since mid-2010, but I haven't really looked at them, or delved into the recent company details.

The Internet rumor cited in the SF Examiner article that notorious socialist and anti-gunner George Soros was somehow associated with Cerberus and/or Freedom Group started several months ago. The NRA-ILA released a statement on October 14 related to this (http://www.nraila.org/Legislation/Read.aspx?ID=7136), and called the rumor patently false. The release reads, in part:

This rumor is completely false and baseless.

NRA has had contact with officials from Cerberus and Freedom Group for some time. The owners and investors involved are strong supporters of the Second Amendment and are avid hunters and shooters.

In reality, at no time has George Soros ever been a part of the ownership group of Freedom Group or Cerberus, and as a privately traded corporation, there is no possibility that he will be in the future.