President Trump has ordered a ban on gun accessories known as “bump stocks”. Trump signed a memorandum asking Attorney General Jeff Sessions to impose regulations that will label bump stocks as illegal. Notably, “a bump fire stock is attached to the end a rifle to turn the semi-automatic into a fully automatic firearm.”
A spokesman for the DOJ said it is "quickly" taking action on the President's order. The move came as an administrative measure following the mass shooting in Las Vegas. A gunman, with at least 12 rifles fitted with bump stocks, killed 58 and wounded many in Las Vegas last October. In December, the Department of Justice and the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) started reviewing whether bump stocks are legal.
The National Rifle Association (NRA) also buttressed the review by saying “the NRA believes that devices designed to allow semi-automatic rifles to function like fully-automatic rifles should be subject to additional regulations.” However, the proposed regulators first need to be published in the Federal Register and then be subject to public comment before being accepted, per CNBC.com.
Impact on the Investing World
As much as 35% of U.S. stock mutual funds targets makers or retailer of guns and ammunition, which translates into “more than $17 billion spread across more than 2,000 funds”, per a tally by a non-profit advocacy group called Goodbye Gun Stocks, quoted on cbsnews.com.
Obviously, this shifts focus to Gun stocks, which are likely to be hit hard by this order.
American Outdoor Brands Corp. (NASDAQ:AOBC) : It is a maker and seller of firearms and accessory products for shooting, hunting and outdoor enthusiasts. The stock fell 5.2% on Feb 20, reflecting the impact of Trump’s order for a ban.
Vista Outdoor Inc. (NYSE:VSTO) : The company operates through two segments: Shooting Sports and Outdoor Products. The stock lost about 4.2% on Feb 20.
Sturm, Ruger & Company Inc. (NYSE:RGR) : This company is engaged in the design, manufacture and sale of firearms and precision metal investment castings. The stock retreated about 3.9% on Feb 20. AlphaMark Actively Managed Small Cap ETF (PA:SMCP) has about 3% focus on RGR and may thus be slightly hit by the order.
Investments That Are Likely to Gain From the Ban
Socially-responsible ETFs should get a real Trump bump from this ban order. Socially-responsible investing seeks to avoid damage or mischief by screening companies on environmental, social and governance (ESG) fronts.
It excludes companies with a negative social or environmental impact, such as weapons, alcohol, tobacco, and gambling. Additionally, companies with a good track of socially-responsible activities generally outperform over the long term (read: Guide to Socially Responsible ETFs).
NuShares ESG Large-Cap Growth ETF NULG, SerenityShares IMPACT ETF ICAN, FlexShares STOXX US ESG Impact Index Fund ESG and iShares MSCI USA ESG Optimized ETF ESGU are some of the options which can be playedamid ban on bump stocks.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>
American Outdoor Brands Corporation (AOBC): Free Stock Analysis Report
FLEXS-STOX ESG (ESG): ETF Research Reports
ALPHAMARK AMS (SMCP): ETF Research Reports
Sturm, Ruger & Company, Inc. (RGR): Free Stock Analysis Report
Vista Outdoor Inc. (VSTO): Free Stock Analysis Report
SERENITYSHR-IMP (ICAN): ETF Research Reports
NUS-ESG LC GRW (NULG): ETF Research Reports
ISHR-MS USA ESG (ESGU): ETF Research Reports
Original post
Zacks Investment Research