GUN The IPO For WMD'ers :D

Discussion in 'On Topic' started by SoonDubu, Oct 20, 2009.

  1. SoonDubu

    SoonDubu The most honest moment in a man's life is the five OT Supporter

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    Cerberus Sets Its Sights on IPO for a Gun Maker



    http://online.wsj.com/article/SB125599020732295081.html?mod=WSJ_hps_LEFTWhatsNews

    After bad bets on cars and home loans, Cerberus Capital Management is turning to guns and bullets.

    The private-equity firm is in advanced preparations for an initial public offering of Freedom Group Inc., said people familiar with the situation, hoping to sell shares in a little-known company it has built into a dominant player in the red-hot rifle-and-ammunition business.

    Over a three-year span, Cerberus -- while under the spotlight for ill-fated acquisitions of auto maker Chrysler LLC and lender GMAC LLC -- has acquired at least seven U.S. gun-and-ammunition makers.

    Those companies have been consolidated into a Madison, N.C.-based company called Freedom Group Inc. It is on track to generate about $900 million in sales this year, according to a person familiar with the results. That makes Freedom one of the world's largest manufacturers of firearms and ammunition.

    A spokesman for Cerberus declined to comment.

    While U.S. retail sales remain sluggish, rifles and ammunition are flying off store shelves. A number of factors are driving increased demand, including the political concerns of gun owners. Since the election of President Barack Obama, demand for firearms has spiked amid concerns the administration will increase restrictions on firearms ownership and levy additional taxes.

    Also, the U.S. military, fighting wars in Iraq and Afghanistan, has increased its weapons purchases, and government contracts present a large opportunity for Freedom Group.

    Freedom Group has been a major beneficiary of the boom. Background checks conducted by the Federal Bureau of Investigation, a key measure of firearms sales, increased by 20% for the first nine months of 2009 from the same period the year before, according to the National Shooting Sports Foundation.

    Cerberus will try to take Freedom Group public amid a flurry of private-equity-backed companies hoping to exploit an improved IPO market. New York-based Cerberus itself brought Talecris Biotherapeutics Holdings Corp., a producer of blood-plasma medicines, to market earlier this month, a deal that has generated a net gain of $1.8 billion.

    But over the past two weeks, several buyout-backed IPOs have sputtered, raising concerns over whether demand will support the flood of supply.


    A successful offering of Freedom Group would arrive at a welcome time for Cerberus. The firm, which manages about $24 billion in assets, has taken losses on its investments in Chrysler and GMAC. Those losses in part caused investors to withdraw $4.77 billion from the firm's hedge funds.

    The origins of Freedom Group date to April 2006, with Cerberus's acquisition of Bushmaster Firearms. A year later, it paid $118 million for Remington Arms Co., the country's largest and oldest maker of rifles. Since then, Cerberus and its affiliates have acquired Marlin Firearms, a maker of lever-action rifles; Cobb Manufacturing; Dakota Arms LLC and DPMS Panther Arms, a large manufacturer of AR-15 rifles. Its acquisition binge shows no signs of slowing. Earlier this month, Remington purchased Advanced Armament Corp., a Norcross, Ga., maker of pistol silencers.

    Cerberus's thesis was to consolidate a fragmented industry it saw as undermanaged. Earlier this year it named Ted Torbeck, a 20-year veteran of General Electric Co., as Freedom's chief executive. Befitting the low profile maintained by Cerberus and its founder, Steven Feinberg, the company lacks a Web site. While each of its brands has a Web site, none mentions Freedom Group. Freedom is expected to enhance its corporate identity in the coming months, according to people familiar with the company.

    Helping oversee the investment for Cerberus is George Kollitides, who like his boss Mr. Feinberg is an avid shooter and hunter. Mr. Kollitides, who has run unsuccessfully for a National Rifle Association board seat, is a member of the upscale hunting club Mashomack Preserve Club in Pine Plains, N.Y. Mr. Feinberg, an ardent deer hunter, favors a Remington Model 700 and owns the rifle in a variety of calibers.


    cliffs: Freedom Group to IPO soon :x:
     
  2. Joe

    Joe 2015 :x: OT Supporter

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    pump and dump? :x:
     
  3. thegooch

    thegooch OT Supporter

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    No wonder Kevin Brittingham went out and bought a Lamborghini a couple weeks ago
     
  4. Soybomb

    Soybomb New Member

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    What ammo company do they own?
     
  5. imperial

    imperial Lurker | Gun | STI Crew OT Supporter

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    Remington.
     
  6. ChipOnShoulder

    ChipOnShoulder New Member

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    I guess that kinda counts...
     
  7. ChipOnShoulder

    ChipOnShoulder New Member

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    So, what do you guys think? Is this gonna be worth investing?

    The thing with small arms it seems is that the civilian market isn't as big a deal as military contracts and foreign military sales (FMS). Freedom Group Inc (FGI) has a good base with Bushmaster and Remington's products (remember the Georgian bushmasters captured by the Russians?) but the new products is where you gamble with whether this new entity will be successful or not. The Magpul Masada, aka Bushmaster ACR, aka, Remington ACR, and the new Remington sniper rifle

    I'd like to hear your guy's thoughts.
     
  8. Soybomb

    Soybomb New Member

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    Well first I'm always skeptical of an ipo. With reports of gun buying crazes from the news still in people's heads, I wouldn't count on getting good first day prices.

    Past that, I think its a big maybe. Look at S&W's historical performance, including the companies they own. Thompson has really drug them down for shitty sales. What about this group? Will they buy into a market that will see its sales suffer? How about the stuff they already own? Has DPMS spent cash to ramp up production to meet demand in the ar market this is starting to fall? At this point I'd probably consider shorting s&w. I'd have to see more info to put my money in. They're rolling up lots of good companies but its hard to say if investors are over valuing such companies right now and if these specific companies are doing smart things right now. ATK is more interesting to me just based on what I know.
     
  9. SoonDubu

    SoonDubu The most honest moment in a man's life is the five OT Supporter

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    i'll probably try and get a few thousand shares to play with

    small arms and the military contracts, and bringing much needed consolidation...

    if glock went public, would you get stocks?
     
  10. Crossett

    Crossett New Member

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    In my mind
    I'll buy some share as soon as they go public for sure.
     
  11. Admitted

    Admitted I shouldn't be on OT right now.

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    Anyone know of a date yet?
     
  12. SoonDubu

    SoonDubu The most honest moment in a man's life is the five OT Supporter

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    Freedom group filed their prospectus yesterday with the SEC. It will be about a month before they IPO, no symbol or exchange yet.
     

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