California Treasurer Urges CalSTRS to Drop Gun Sellers

$213.7 billion fund owns shares in at least three public firms that make and sell guns and ammunition.

California Treasurer John Chiang has urged the $213.7 billion California State Teachers Retirement System (CalSTRS) to divest from manufacturers and sellers of assault weapons and “bump stocks” in the wake of the mass shooting in Las Vegas that killed 58 people Oct. 1.

“I respectfully call upon this board to refrain from allocating even a penny of our $213

billion in investable assets to the benefit of wholesale or retail sellers of these banned weapons,” wrote Chiang in a letter to Harry Keiley, the chair of CalSTRS’ investment committee. “I also strongly believe CalSTRS should not have any investments—direct or indirect—in any company which manufacturers or sells bump stocks, slide-fire devices, and other accessories that can accelerate a semi-automatic rifle’s rate of fire.”

Chiang said the divestment recommendation falls within CalSTRS’ existing investment policy, and upholds the board’s fiduciary duty to the pension system’s members.

“Current policy requires us to view our investment decisions through a number of prisms, one of which is risk of investing in companies making products detrimental to public health and safety,” Chiang wrote. “It would be difficult to argue that battlefield assault weapons and aftermarket accessories, which are designed to rain down bullets, do not fall into this category.”

Chiang didn’t specify which investments held by CalSTRS should be shunned, and requested that CalSTRS staff develop a comprehensive accounting of the retirement system’s exposure to companies that manufacture or sell the products. However, a cursory glance at CalSTRS holdings shows at least three companies the fund is invested in that sell guns and ammunition: Orbital ATK Inc., Vista Outdoor Inc., and National Presto Industries Inc.

Virginia-based Orbital ATK Inc., in which the fund owns nearly 127,000 shares worth $10.8 million, is an aerospace and defense systems company that took in $4.46 billion in sales in 2016. The company’s armament systems division specializes in low-cost, precise weapons and ammunition, and claims to be world’s top producer of medium-caliber live and training ammunition and gun systems.

The fund also owns just under 134,000 shares of Vista Outdoor Inc., which is worth approximately $6.4 million. The company designs, develops, manufactures, and sources ammunition, long guns, and related products. Shooting sports products represent more than half of the company’s sales.

“Among these categories, we derive the largest portion of our sales from ammunition, which is a consumable, repeat purchase product,” said the company in its 2017 annual report. “During late fiscal 2015 and 2016, firearms and ammunition sales experienced an increase, as more individuals entered the market and certain public and political events provided focus on the industry.”

CalSTRS also owns 10,320 shares of National Presto Industries Inc., worth a little less than $1 million. National Presto Industries, Inc., operates in two business segments, one that makes housewares products and small appliances, and another that manufactures medium-caliber training and tactical ammunition.

In 2013, in response to the Sandy Hook Elementary School massacre in Connecticut the previous year, CalSTRS divested from companies that made firearms and high-capacity magazines that are illegal in California.


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