Cerberus is responding to threats from the massive CalSTRS retirement fund, a public employees’ retirement fund which manages its investments primarily for political and social reasons, to disinvest its large stake in Cerberus. (How large? Three Quarters of a Billion large).
CalSTRS may simply need the cash. Under the accounting standards required for private firms, it would be bankrupt, as it is massively underfunded by the California government, and its social investment policy yields low returns (1.8%!). It’s around $60 billion in the hole now, and admits it would need to boost input by $3 to $4 billion a year to close the gap, and that’s using their laughable actuarial assumption of a 7.75% no-risk return, not their actual 1.8%.
The rapid growth of the sector has led Cerberus’s financial results for years. Freedom Group’s 2012 results to date are well over $100 milion higher than the same period in 2011.
Freedom Group includes many of the most recognizable names in guns, including Bushmaster, Parker, Remington, Marlinm H&R 1871, and lesser known one such as Daota Arms, ParaUSA, DPMS /Panther, silencer maker Advanced Armament, and most recent acquisition Tapco among others.