{"id":2758,"date":"2012-12-19T15:16:00","date_gmt":"2012-12-19T15:16:00","guid":{"rendered":"https:\/\/onlygunsandmoney.com\/2012\/12\/19\/behind-cerberus-announcement-yesterday\/"},"modified":"2019-08-16T18:20:18","modified_gmt":"2019-08-16T18:20:18","slug":"behind-cerberus-announcement-yesterday","status":"publish","type":"post","link":"https:\/\/onlygunsandmoney.com\/?p=2758","title":{"rendered":"Behind The Cerberus Announcement Yesterday"},"content":{"rendered":"<div class='__iawmlf-post-loop-links' style='display:none;' data-iawmlf-post-links='[{&quot;id&quot;:13696,&quot;href&quot;:&quot;http:\\\/\\\/onlygunsandmoney.blogspot.com\\\/2012\\\/12\\\/cerberus-moves-to-ditch-freedom-group.html&quot;,&quot;archived_href&quot;:&quot;&quot;,&quot;redirect_href&quot;:&quot;&quot;,&quot;checks&quot;:[],&quot;broken&quot;:false,&quot;last_checked&quot;:null,&quot;process&quot;:&quot;done&quot;},{&quot;id&quot;:14700,&quot;href&quot;:&quot;http:\\\/\\\/finance.fortune.cnn.com\\\/2012\\\/12\\\/17\\\/the-money-behind-the-massacre&quot;,&quot;archived_href&quot;:&quot;https:\\\/\\\/web-wp.archive.org\\\/web\\\/20140306215933\\\/http:\\\/\\\/finance.fortune.cnn.com\\\/2012\\\/12\\\/17\\\/the-money-behind-the-massacre\\\/&quot;,&quot;redirect_href&quot;:&quot;&quot;,&quot;checks&quot;:[{&quot;date&quot;:&quot;2026-04-20 05:36:10&quot;,&quot;http_code&quot;:403},{&quot;date&quot;:&quot;2026-04-26 06:53:36&quot;,&quot;http_code&quot;:403}],&quot;broken&quot;:false,&quot;last_checked&quot;:{&quot;date&quot;:&quot;2026-04-26 06:53:36&quot;,&quot;http_code&quot;:403},&quot;process&quot;:&quot;done&quot;},{&quot;id&quot;:14701,&quot;href&quot;:&quot;http:\\\/\\\/www.calstrs.com\\\/Investments\\\/portfolio\\\/privequityperformance.pdf&quot;,&quot;archived_href&quot;:&quot;https:\\\/\\\/web-wp.archive.org\\\/web\\\/20120724194115\\\/http:\\\/\\\/www.calstrs.com\\\/investments\\\/portfolio\\\/privequityperformance.pdf&quot;,&quot;redirect_href&quot;:&quot;&quot;,&quot;checks&quot;:[{&quot;date&quot;:&quot;2026-04-20 05:36:15&quot;,&quot;http_code&quot;:404},{&quot;date&quot;:&quot;2026-04-26 06:53:36&quot;,&quot;http_code&quot;:404}],&quot;broken&quot;:false,&quot;last_checked&quot;:{&quot;date&quot;:&quot;2026-04-26 06:53:36&quot;,&quot;http_code&quot;:404},&quot;process&quot;:&quot;done&quot;},{&quot;id&quot;:14702,&quot;href&quot;:&quot;http:\\\/\\\/www.calstrs.com\\\/Newsroom\\\/2012\\\/news121812.aspx&quot;,&quot;archived_href&quot;:&quot;&quot;,&quot;redirect_href&quot;:&quot;&quot;,&quot;checks&quot;:[],&quot;broken&quot;:false,&quot;last_checked&quot;:null,&quot;process&quot;:&quot;done&quot;},{&quot;id&quot;:14703,&quot;href&quot;:&quot;http:\\\/\\\/www.cerberuscapital.com\\\/news\\\/cerberus_capital_management_statement_regarding_freedom_group_inc&quot;,&quot;archived_href&quot;:&quot;&quot;,&quot;redirect_href&quot;:&quot;&quot;,&quot;checks&quot;:[],&quot;broken&quot;:false,&quot;last_checked&quot;:null,&quot;process&quot;:&quot;done&quot;},{&quot;id&quot;:14704,&quot;href&quot;:&quot;http:\\\/\\\/www.calstrs.com\\\/About%20CalSTRS\\\/Teachers%20Retirement%20Board\\\/BoardPolicyManual.pdf#page=146&quot;,&quot;archived_href&quot;:&quot;&quot;,&quot;redirect_href&quot;:&quot;&quot;,&quot;checks&quot;:[],&quot;broken&quot;:false,&quot;last_checked&quot;:null,&quot;process&quot;:&quot;done&quot;}]'><\/div>\n<p>\nAs was mentioned yesterday in relation <a href=\"http:\/\/onlygunsandmoney.blogspot.com\/2012\/12\/cerberus-moves-to-ditch-freedom-group.html\" target=\"_blank\" rel=\"noopener\">to the announcement that Cerberus Capital Management is putting the Freedom Group up for sale<\/a>, the threat of the California State Teachers Retirement System to remove $500 million in investments from Cerberus was a good part of their rationale. It appears that CalSTRS was itself reacting to the bad press it was getting regarding their investment in Cerberus and, by extension, the Freedom Group.<\/p>\n<p><a href=\"http:\/\/finance.fortune.cnn.com\/2012\/12\/17\/the-money-behind-the-massacre\/\" target=\"_blank\" rel=\"noopener\">From Dan Primack of Fortune.com<\/a> in his rather anti-gun screed about CalSTRS&#8217;s investment in Cerberus:<\/p>\n<blockquote class=\"tr_bq\"><p>\n<i>Do you know who owns more than a 6% stake in the maker of .223<br \/>\nBushmaster rifles, like the one used last Friday to murder 20 first<br \/>\ngraders and seven adults in Newtown, Connecticut? California public<br \/>\nschoolteachers. <\/i><\/p><\/blockquote>\n<blockquote class=\"tr_bq\">\n<p><i>The company in question is Freedom Group, a privately-held firearms<br \/>\nconglomerate formed by private equity and hedge fund group Cerberus<br \/>\nCapital Management. Cerberus created the platform in April 2006 via the<br \/>\nacquisition of Bushmaster, after which it added another 10 makers of<br \/>\nfirearms, ammunition and accessories (including Remington, Marlin Arms<br \/>\nand Barnes Bullets). <\/i><\/p><\/blockquote>\n<blockquote class=\"tr_bq\"><p>\n<i>The California State Teachers&#8217; Retirement System (CalSTRS) committed to <a href=\"http:\/\/www.calstrs.com\/Investments\/portfolio\/privequityperformance.pdf\" rel=\"external nofollow noopener noreferrer\" target=\"new\">invest<\/a><br \/>\n a whopping $500 million into a $7.5 billion Cerberus fund that has<br \/>\nhelped bankroll Freedom Group. That means that it effectively could own a<br \/>\n 6.67% stake in the gun maker, which filed to go public in late 2009<br \/>\nbefore pulling the offering in early 2011. In fact, the figure could be<br \/>\neven higher since CalSTRS also committed $100 million to a $1.4 billion<br \/>\npredecessor fund, which likely made the original investment.<\/i>\n<\/p><\/blockquote>\n<p>CalSTRS has an investment policy statement that reportedly takes into account a number of risk factors including &#8220;social injury&#8221; and &#8220;human health&#8221;. Primack thinks their indirect investment in the Freedom Group violated this investment policy statement. He then serves up this bit of codswallop:<\/p>\n<blockquote class=\"tr_bq\"><p>\n<i>But I also think that it&#8217;s time for our large nonprofit institutions to<br \/>\nput some of their money where their mission is. Profit should be the<br \/>\nprimary goal of their investment offices, but not at the expense of<br \/>\ntheir broader purposes. If a schoolteachers union or university<br \/>\nendowment or nonprofit foundation truly cares about stopping the next<br \/>\nmass killing, then they should not provide capital that produces the<br \/>\ninstruments of such destruction.<\/i><\/p><\/blockquote>\n<p>By Primack&#8217;s rationale, CalSTRS then should not invest in any company that makes or deals in petroleum products, agricultural fertilizers, metal hardware, garden tools, or any number of other products that could have been used to make improvised explosives or sharp pointy things.<\/p>\n<p>Obviously, this sort of nonsensical criticism found its mark with the CalSTRS&#8217;s investment board. <a href=\"http:\/\/www.calstrs.com\/Newsroom\/2012\/news121812.aspx\" target=\"_blank\" rel=\"noopener\">They released this statement<\/a> regarding their investment with Cerberus and the pending sale of the Freedom Group.<\/p>\n<blockquote class=\"tr_bq\"><p>\n<i><b>WEST SACRAMENTO, CA<\/b> \u2013 The California State Teachers&#8217;<br \/>\nRetirement System (CalSTRS) released a statement today regarding its<br \/>\ninvestments in private equity funds managed by Cerberus Capital<br \/>\nManagement that are invested in the Freedom Group, which manufactures<br \/>\nfirearms: <\/i><\/p><\/blockquote>\n<blockquote class=\"tr_bq\">\n<p><i>&#8220;The tragic and devastating acts that took place December 14 at Sandy<br \/>\n Hook Elementary School in Connecticut have prompted many in this<br \/>\ncountry to call for change:  To determine what we can do differently to<br \/>\nhelp ensure the unthinkable never happens again.<br \/>\n<\/i><\/p><\/blockquote>\n<blockquote class=\"tr_bq\"><p>\n<i>&#8220;In our case, CalSTRS investment staff immediately began reviewing<br \/>\nour investments in private equity funds managed by Cerberus Capital<br \/>\nManagement (Institutional Series Three and Series Four) that are<br \/>\ninvested in the Freedom Group, which manufactures firearms.  Our<br \/>\ninvestments staff also initiated discussions with Cerberus to learn more<br \/>\n about the facts surrounding the investments.<br \/>\n<\/i><\/p><\/blockquote>\n<blockquote class=\"tr_bq\"><p>\n<i>&#8220;This morning, Cerberus Capital Management issued a <a href=\"http:\/\/www.cerberuscapital.com\/news\/cerberus_capital_management_statement_regarding_freedom_group_inc\" target=\"_blank\" title=\"statement\" rel=\"noopener noreferrer\">statement<\/a> <span class=\"small\"> (External link)<\/span> noting its intent to immediately engage in a formal process to sell its investment holdings in the Freedom Group. <\/i><\/p><\/blockquote>\n<blockquote class=\"tr_bq\"><p>\n<i>&#8220;Cerberus is a multi-strategy private equity firm. They invest in a<br \/>\nwide variety of firms and strategies; Financial Services, Healthcare,<br \/>\nConsumer &amp; Retail, Manufacturing &amp; Distribution, Building<br \/>\nProducts, Energy &amp; Natural Resources, Apparel, Paper, Packaging<br \/>\n&amp; Printing, Transportation, Industrial &amp; Automotive, and Travel<br \/>\n&amp; Leisure.<br \/>\n<\/i><\/p><\/blockquote>\n<blockquote class=\"tr_bq\"><p>\n<i>&#8220;CalSTRS first invested in Cerberus Capital Series 3 in 2003, and<br \/>\nagain in 2007 in Cerberus Capital Series 4 as part of the core Private<br \/>\nEquity program. The Freedom Group represents a very small investment<br \/>\nwithin these funds.  CalSTRS owns 2.4 percent of Freedom Group, not 6.67<br \/>\n percent as reported by some media outlets.<br \/>\n<\/i><\/p><\/blockquote>\n<blockquote class=\"tr_bq\"><p>\n<i> &#8220;CalSTRS has established a thorough vetting process for potential<br \/>\ninvestments that seeks to test not only their financial potential, but<br \/>\ntheir social, human and environmental impacts as well. In fact, current<br \/>\npolicies require that the risks associated with products that pose<br \/>\nsignificant threats to human well-being be taken into account before an<br \/>\ninvestment is made by CalSTRS investment managers. They are outlined in <a href=\"http:\/\/www.calstrs.com\/About%20CalSTRS\/Teachers%20Retirement%20Board\/BoardPolicyManual.pdf#page=146\" title=\"CalSTRS 21 Risk Factors\" target=\"_blank\" rel=\"noopener\">CalSTRS 21 Risk Factors<\/a> <span class=\"small\"> (PDF &#8211; 5.5MB)<\/span>, which we adopted in 2008 after our investments in Cerberus.<br \/>\n<\/i><\/p><\/blockquote>\n<blockquote class=\"tr_bq\"><p>\n<i>&#8220;Moving forward, CalSTRS will work to ensure that all of our<br \/>\ninvestments are taking these very important criteria into<br \/>\nconsideration.&#8221; <\/i><\/p><\/blockquote>\n<blockquote class=\"tr_bq\"><p>\n<i>The California State Teachers&#8217; Retirement System, with a<br \/>\nportfolio valued at $154.8 billion as of October 31, 2012, is the<br \/>\nlargest educator-only pension fund in the world. CalSTRS administers a<br \/>\nhybrid retirement system, consisting of traditional defined benefit,<br \/>\ncash balance and voluntary defined contribution plans, as well as<br \/>\ndisability and survivor benefits. CalSTRS serves California&#8217;s 856,000<br \/>\npublic school educators and their families from the state&#8217;s 1,600 school<br \/>\n districts, county offices of education and community college districts.<\/i>\n<\/p><\/blockquote>\n<div style=\"margin-top: 0px; margin-bottom: 0px;\" class=\"sharethis-inline-share-buttons\" ><\/div>","protected":false},"excerpt":{"rendered":"<p>As was mentioned yesterday in relation to the announcement that Cerberus Capital Management is putting the Freedom Group up&hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"iawp_total_views":2,"footnotes":""},"categories":[1],"tags":[3467,2789,3468],"class_list":["post-2758","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-calstrs","tag-cerberus-capital-management","tag-investment-management"],"_links":{"self":[{"href":"https:\/\/onlygunsandmoney.com\/index.php?rest_route=\/wp\/v2\/posts\/2758","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/onlygunsandmoney.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/onlygunsandmoney.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/onlygunsandmoney.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/onlygunsandmoney.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2758"}],"version-history":[{"count":1,"href":"https:\/\/onlygunsandmoney.com\/index.php?rest_route=\/wp\/v2\/posts\/2758\/revisions"}],"predecessor-version":[{"id":8624,"href":"https:\/\/onlygunsandmoney.com\/index.php?rest_route=\/wp\/v2\/posts\/2758\/revisions\/8624"}],"wp:attachment":[{"href":"https:\/\/onlygunsandmoney.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2758"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/onlygunsandmoney.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2758"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/onlygunsandmoney.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2758"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}