In our March issue we dove deep into the controversy regarding potential new gun control measures. We pointed out how calls for gun control lead to rallies in the sector. It has become reliable trade, even as more public pension funds call for divestiture from the sector.
Our timing was prescient as the President laid out his executive action that would eliminate the so-called gun show loophole along with other modest measures. The market acted right on cue as many gun manufacturing stocks rallied impressively. Wedbush Securities analyst James Hardiman’s upward price target of $26 for Smith & Wesson (SWHC) was reached in early March. Same for BB&T Capital Market’s Brian Ruttenbur, who targeted SWHC to hit $28. The pattern repeated again in June as SWHC shares jumped more than 7% the first trading day following the Orlando mass shooting. Sturm, Ruger & Co. (RGR) saw its shares climb nearly 10%.