Consumer Safety Alert For S&W M&P 15-22

Smith & Wesson has issued a consumer safety alert for all versions of their M&P 15-22 manufactured before February 1, 2019. They found that in a couple of samples the breech face counter bore depth was not within manufacturing specifications and could cause slam fires.

The full alert sent out on Friday is below:

ESCRIPTION - Please Read This If You Have A M&P15-22 Rimfire Firearm.

PRODUCT AFFECTED:
ALL models of M&P15-22 rifles and pistols manufactured before February 1, 2019.

STOP USING YOUR M&P15-22 UNTIL IT HAS BEEN INSPECTED AND YOUR BOLT REPLACED (IF NECESSARY).
Smith & Wesson has identified two M&P15-22 firearms from recent production on which the breech face counter bore depth was not within manufacturing specification. In those firearms, the lack of depth may allow the bolt, upon closing, to crush the rim of the case, causing the round to fire, cycling the bolt, and potentially resulting in multiple discharges without depressing the trigger. This issue can occur in the following two scenarios:

1) With a loaded magazine in the firearm and the bolt locked to the rear, depressing the bolt release to allow the bolt to drop freely may ignite the round as the bolt closes without engaging the trigger and with the safety selector in either the safe or the fire position, and may also result in multiple discharges.

2) With a loaded magazine in the firearm, bolt in the closed position and a round in the chamber and the safety selector in the fire position, depressing the trigger will cause the round to fire normally, however as the bolt cycles, the next round may be ignited by the bolt crushing the rim of the case as it closes, causing multiple discharges.

We believe that these are isolated incidents, however, any unintended discharge of a firearm has the potential to cause injury. Therefore, we have developed this inspection procedure to ensure that all products in the field are safe to use. We are asking customers to perform the following procedure and to refrain from using their M&P15-22 until the bolt has been inspected and replaced as necessary.

DESCRIPTION OF THE PRODUCT INVOLVED:
The out of specification condition has been found only in bolts that were recently manufactured. While our investigation suggests that the incidents are isolated, we have established this inspection procedure as a precautionary matter to ensure that all M&P15-22 firearms in service meet our design specifications. We are asking consumers of all M&P15-22 firearms manufactured before February 1, 2019 to inspect their bolt for this condition.

REMEDY/ACTION TO BE TAKEN:
The bolt from your M&P15-22 must be inspected to determine whether it exhibits the condition identified in this notice. To determine whether your firearm is affected by this condition, please inspect your firearm by following the inspection instructions provided here.
DOWNLOAD INSTRUCTION MANUAL | VIEW INSPECTION VIDEO

CLICK HERE FOR FAQ FACT SHEET
If you are uncomfortable in conducting the bolt inspection outlined here, or are unsure whether the condition described in this notice applies to your bolt, please send your bolt to Smith & Wesson for inspection and replacement if necessary.
If you want Smith & Wesson to perform the inspection, send your bolt to Smith & Wesson for free inspection and replacement (if necessary).

If you want to perform the bolt inspection yourself, contact us for the free M&P15-22 BOLT INSPECTION GAUGE Part Number: 3012155 OR place an ORDER ONLINE to recieve inspection gauge.

If the bolt from your firearm is affected by the condition outlined in this notice, please send the bolt to Smith & Wesson. If necessary, your bolt will be replaced at no cost to you. Your bolt will be returned as quickly and efficiently as possible. All shipping and replacement costs will be covered by Smith & Wesson.

To determine if this consumer advisory applies to your M&P15-22 firearm, please utilize our
SERIAL NUMBER VERIFICATION TOOL

Website For More Information: MP15-22SafetyAlert.com
Email: MP15-22SafetyAlert@smith-wesson.com
Customer Service Phone: 1-800-713-0356

M&P®380 SHIELD™ EZ™ CONSUMER ADVISORY

Smith & Wesson has issued a consumer advisory for their M&P 380 Shield EZ with a manual thumb safety.

Like any firearm, the function of the M&P®380 Shield™ EZ™ Manual Thumb Safety pistol can be influenced by the type and quality of ammunition used with the pistol. In the case of the M&P 380 Shield EZ Manual Thumb Safety, we have found that in very rare circumstances, ammunition that produces a high level of felt recoil can cause the manual safety to move from the fire to the “safety on” position during firing. Should this occur, you will not be able to fire the next round unless and until the manual safety is reset to the fire position.

At Smith & Wesson, we are committed to designing and producing firearms that meet the highest quality and performance standards. To ensure that every Smith & Wesson handgun meets our standards for reliability and performance, as of April 4, 2018, we have engineered the manual safety so that it will be less susceptible to the influence of ammunition weight, velocity and loads. Any M&P 380 Shield EZ Manual Thumb Safety pistol produced before April 4, is eligible for a no-cost upgrade. To determine if this consumer advisory applies to your pistol, please utilize our serial number verification tool.

If your pistol is subject to this advisory, please call Smith & Wesson at 1-800-331-0852 or email us at MP380EZAdvisory@Smith-Wesson.com. A FedEx return label and shipping instructions to facilitate the return of your M&P 380 Shield EZ pistol will be mailed to you promptly. If you have any questions, you may call 1-800-331-0852 for more information.

WARNING: READ AND FOLLOW THE WARNINGS IN YOUR OWNER’S MANUAL. NEVER USE “PLUS-P” (+P), “PLUS-P-PLUS” (+P+); OR RELOADED AMMUNITION WITH THE M&P 380 EZ. ALWAYS USE FACTORY MANUFACTURED AMMUNITION PRODUCED TO SAAMI SPECIFICATIONS.

You can find the serial number verification tool here. Remember, it is Friday the 13th and you don't want to take any chances.

Finally Confirmed - S&W Buys Suppressor Maker Gemtech (Updated)

In what has to be considered the worst kept secret on the Interwebs, it was finally confirmed today that Smith & Wesson division of American Outdoor Brands Corp. is buying suppressor maker Gemtech (Gemini Technologies). The Firearm Blog announced it as breaking news on Sunday, July 2nd, and many people posted this to Facebook including myself.

Given that AOBC is a public company, SEC Regulation FD requires "companies to distribute material information in a manner reasonably designed to get that information out to the general public broadly and non-exclusively." A purchase of this magnitude would certainly have been "material". I kept looking for a news release on AOBC's investor relations website as well as for a 8-K filing on the SEC's website regarding this purchase. 8-K filings usually are simultaneous with new releases though a company has up to four business days to make the filing. I could not find anything official on the purchase of Gemtech.

While I assumed that there was indeed a transaction that was going to take place, not having official confirmation told me one of two things. First, that the transaction wasn't a done deal yet and maybe there was a snag in the negotiations. Second, it could have meant - and I think this is what happened here - that someone, somewhere jumped the gun on the announcement and violated a non-disclosure agreement.

I think the timing is right for both companies involved. S&W competitors Ruger and SIG both now produce their own suppressor lines. So, too, does Remington with their AAC division. The purchase of Gemtech now allows S&W into the game at a significant level without having to start from scratch. It may also signify a vote of confidence on the part of AOBC and S&W that the Hearing Protection Act will pass as either a stand alone bill or as part of the SHARE Act.

According to Gemtech's website, they have been in the suppressor business since 1976. While I don't know how the ownership of Gemtech is structured, I'm guessing that what we are seeing here is a situation similar to that of Crimson Trace. The founder(s) have reached a point where they want to relax a bit and this gives them the opportunity to cash out while still maintaining a presence. Thus, the purchase of Gemtech by S&W becomes a win-win situation for all involved.

The official release is below and notes that the current CEO of Gemtech, Ron Martinez, will stay on as General Manager.

SPRINGFIELD, Mass., July 5, 2017 /PRNewswire/ -- American Outdoor Brands Corporation (NASDAQ Global Select: AOBC), a leading manufacturer of firearms and a provider of quality accessory products for the shooting, hunting, and rugged outdoor enthusiast, today announced that its firearms business, Smith & Wesson Corp., has agreed to acquire substantially all of the assets of Gemini Technologies, Incorporated ("Gemtech"), a provider of high quality suppressors and accessories for the consumer, law enforcement, and military markets.

James Debney, President and CEO of American Outdoor Brands, said, "Gemtech is widely recognized for producing some of the finest rifle and pistol suppressors in the market. Gemtech's strong product development capabilities, combined with our experience in brand management and our manufacturing expertise, will help us to efficiently develop both firearms and suppressors, minimizing our time to market for both product categories. We view this acquisition as opportunistic, allowing us to enter the suppressor category, which resonates strongly with our core firearm consumer, at a time when the market is particularly soft. These elements combine to make Gemtech an excellent fit with our long term strategy."

The company intends to complete the acquisition of Gemtech utilizing cash on hand and expects the transaction to close this summer. Ron Martinez, President of Gemtech, will continue in his leadership role as General Manager, heading up the company's strong team located in Eagle, Idaho.

UPDATE: On Monday I had written Liz Sharp, VP for Investor Relations at AOBC, inquiring why there was no release on the purchase of Gemtech and asked if the info had leaked prior to the official release. I got a response back last night after I had written this post. It seems that since AOBC didn't buy Gemtech but just their assets it was not considered "material".

Hello, John, and thank you for the inquiry. Yes, Smith & Wesson will purchase the assets of Gemtech in a transaction that we plan to close this summer. Since the transaction is an asset purchase and not deemed to be material, we announced the transaction internally to our employees prior to the holiday, and externally via a press release this morning. ... We believe this is a great fit with our strategy. Please let me know if I can help further, and thanks again for the inquiry.

S&W Wants To Change It Corporate Name

Smith & Wesson Holding Company filed a Sec. 14A Proxy Statement with the Securities and Exchange Commission today. It was to issue a notice of a special stockholders meeting on December 13th. This meeting is to have the stockholders approve a corporate name change from Smith & Wesson Holding Company to American Outdoor Brands Corporation.

WTF?

You can see the proposal that has been approved by the Board of Directors below. I fully realize that they have bought companies like Crimson Trace and Battenfield Technologies in recent years. While they will be keeping the Smith & Wesson name for their firearms subsidiary, this smacks too much of the Freedom Group aka Remington Outdoor Company.

As a shareholder of SWHC stock, my intention is to vote no on this proposal. This is a personal decision and has nothing to do with my day job. You might have a different opinion on this and, if so, I'd love to hear it in the comments.

PROPOSAL ONE

APPROVAL OF THE SECOND AMENDED AND RESTATED ARTICLES OF INCORPORATION TO CHANGE OUR CORPORATE NAME FROM SMITH & WESSON HOLDING CORPORATION TO AMERICAN OUTDOOR BRANDS CORPORATION

Our Board of Directors has approved the Second Amended and Restated Articles of Incorporation to change our corporate name from Smith & Wesson Holding Corporation to American Outdoor Brands Corporation. We now seek stockholder approval of the Second Amended and Restated Articles of Incorporation to accomplish the name change. We believe that the proposed name change will better reflect our increasingly diverse business and stated vision to become the leading provider of quality products for the shooting, hunting, and rugged outdoor enthusiast. As such, the proposed name change will better convey to existing and potential investors the nature of our expanding business around a number of individual but synergistic companies. We also believe that the proposed name change will better differentiate our identity, as a holding company, from the identity of our firearm subsidiary, both of which currently carry the name “Smith & Wesson.”

Currently, we are a holding company that owns, directly and indirectly, a family of consumer product companies addressing the shooting, hunting, and rugged outdoor markets, including Smith & Wesson Corp., Battenfeld Technologies, Inc., Crimson Trace Corporation, Deep River Plastics, LLC, and BTI Tools, LLC. Those subsidiary companies operate in four divisions and manage multiple brands, including the following:

BOG–POD ® – Tripods, Bipods, Monopods, and Accessories

Caldwell ® – Shooting Supplies

Crimson Trace ® – Electro Optics

Deep River Plastics™ – Precision Plastic Injection Molding

Frankford Arsenal ® – Reloading Tools

Golden Rod ® – Moisture Control

Hooyman ® – Outdoor Saws and Accessories

Lockdown ® – Vault and Safety Accessories

M&P ® – Firearms and Outdoor Accessories such as Bags, Knives, Specialty Tools, and Flashlights

Non–Typical™ – Wildlife Solutions

Old Timer ® – Knives and Specialty Tools

Performance Center ® – High Performance, Specialty, and Custom Firearms

Schrade ® – Knives and Specialty Tools

Smith & Wesson ® – Firearms and Outdoor Accessories such as Bags, Knives, Specialty Tools, and Flashlights

Thompson/Center™ – Hunting Firearms and Accessories

Tipton ® – Firearm Cleaning Supplies

Uncle Henry ® – Knives and Specialty Tools

Wheeler ® Engineering – Gunsmithing Supplies

Each of our subsidiary company’s brands has tremendous value and meaning to its loyal customer base, and each subsidiary company will retain its current name under this proposal so that it can continue to benefit from the brand equity that has been built over the years. Our existing firearms business subsidiary will continue to operate as, and be named, Smith & Wesson Corp. This subsidiary owns the 164 year old Smith & Wesson brand – a brand that is one of our strongest assets and a brand that must be preserved, supported, and protected so that we may continue to benefit from its iconic nature. Thus, changing our name is not intended to diminish the importance of the Smith & Wesson brand in our portfolio. Rather, our new name will represent a broader and more inclusive platform from which to expand into the shooting, hunting, and rugged outdoor markets.

We believe that changing our corporate name to American Outdoor Brands Corporation will better reflect our strategic focus on the shooting, hunting, and rugged outdoor markets. Changing our name will not result in any change in the name of any subsidiary company or any branded product marketed by any of those subsidiary companies, and, if the proposal is approved, our corporate structure would remain the same.

4				Special Proxy Statement

---

Table of Contents

		PROPOSAL ONE

If approved by the stockholders, the proposed Second Amended and Restated Articles of Incorporation will become effective upon the filing of the Second Amended and Restated Articles of Incorporation with the Secretary of State of the state of Nevada, which we anticipate will occur on or about January 1, 2017. At the same time, we also anticipate we will adopt the symbol “AOBC” for our stock exchange listing, as it will be more closely aligned with our new name.

A copy of the proposed Second Amended and Restated Articles of Incorporation that would be filed with the Secretary of State of the state of Nevada to effect the name change is attached hereto as Appendix A and is hereby incorporated by reference into this proxy statement; provided, however, that such Second Amended and Restated Articles of Incorporation are subject to change or modification to include any technical changes as may be required by the office of the Secretary of State of the state of Nevada.

On the date of this proxy statement, we issued a press release regarding our proposed corporate name change. A copy of the press release is attached hereto as Appendix B and is hereby incorporated by reference into this proxy statement.

OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE PROPOSAL TO APPROVE THE SECOND AMENDED AND RESTATED ARTICLES OF INCORPORATION TO CHANGE OUR CORPORATE NAME FROM SMITH & WESSON HOLDING CORPORATION TO AMERICAN OUTDOOR BRANDS CORPORATION.

Smith & Wesson Does Their Own Bit Of Shopping

Smith and Wesson Holdings Corporation (SWHC), the parent company of Smith & Wesson, got started early on their Black Friday shopping. They are reported to have purchased Battenfield Technologies for approximately $130 million. Battenfield Technologies is a Columbia, Missouri-based maker of firearms accessories.

Smith & Wesson Chief Executive James Debney said the acquisition “fits perfectly within our core firearm business. It also allows us to move more strongly into the hunting vertical as well as establish a strong platform for growth in our existing firearm accessories business, which has been a small but highly profitable part of our company.”

Smith & Wesson expects the deal, set to close in mid-to-late December, to boost the company’s margins, earnings and cash generation in its business year ending in April 2016. The move is also expected to contribute incremental revenue of more than $55 million for the 2016 business year.

Battenfeld Chief Executive Jim Gianladis will serve as the president of Battenfeld Technologies and will report directly to Mr. Debney.

Battenfeld was acquired by private-equity firm Clearview Capital in June 2012.

Battenfield's brands include Caldwell, Wheeler Engineering, Tipton Cleaning Supplies, Frankford Arsenal, Bog-Pod, Lockdown, Golden Rod Moisture Control, and Non-Typical Wildlife Solutions.

Battenfield was owned until 2012 by Larry Porterfield of MidwayUSA and his family. They sold their interest in the company to Clearview Capital and to members of the Battenfield management team.

A Partnership That Makes Sense

Smith & Wesson and General Dynamics announced today that they would be partnering on a submission for the Army's Modular Handgun System. This is the Army's plan to upgrade their sidearm's from the Beretta M9 which is getting a little long in the tooth.

When you think about it, this partnership makes a lot of sense. Smith & Wesson knows handguns and has done very well with their polymer striker-fired M&P platform. General Dynamics knows defense contracting and they are one of the largest defense contractors making everything from nuclear submarines to Gatling guns.

It will be interesting to see what they come up with. Other handgun manufacturers would be smart to follow their lead in approaching this as a joint project.

Below is the joint press release from Smith & Wesson and General Dynamics:

ST. PETERSBURG, Fla. – General Dynamics Ordnance and Tactical Systems and Smith &Wesson Holding Corp. are partnering to pursue the U.S. Army's Modular Handgun System (MHS) solicitation to replace the M9 standard Army sidearm.

The strategic partnership's Modular Handgun System will be based on the Smith &Wesson M&P Polymer Pistol platform. Designed with a reinforced polymer chassis, superior ergonomics, ambidextrous controls, and proven safety features, the M&P is used by U.S. and law enforcement agencies worldwide. The M&P's features make it well suited for the MHS requirement by providing sidearms that exceed the military's expectations for a future modular handgun in terms of performance, reliability and durability. The M&P pistol has been in production since 2005.

"This partnership combines General Dynamics' proven legacy in manufacturing military armaments with Smith &Wesson's extensive experience in designing and manufacturing firearms for commercial applications," said Tim McAuliffe, vice president and general manager of medium caliber ammunition and weapons for General Dynamics Ordnance and Tactical Systems. "General Dynamics' extensive background in winning and managing military contracts brings proven leadership to the venture and by joining together, we will use our combined knowledge and expertise to bring this unique capability to the U.S. military to better equip the warfighter."

Smith &Wesson President and CEO, James Debney, said, "The strategic partnership between our two companies provides us with a tremendous opportunity to support our military with a state-of-the-art sidearm, namely our M&P pistol. General Dynamics Ordnance and Tactical Systems brings us a wealth of experience and resource in federal government contracting and that capability is an ideal match with our knowledge in handgun manufacturing technology. We look forward to working together to pursue this exciting opportunity to support our military."

The Army's draft MHS solicitation identifies design and performance requirements for a new modular handgun system that can be easily adjusted to fit all hand sizes and is optimized for improved gun, ammunition and magazine performance. The Army's stated plan is to commence the competition in January 2015, with delivery of the first new handgun systems in 2017.

Stepping Up To The Plate In California

As I reported earlier this month, both Ruger and Smith & Wesson have taken a stand against the California Department of Justice Handgun Roster by letting numerous popular models of their handguns drop off the list. In other words, they refuse to make a California-only model that includes a microstamped firing pin.

Now Mike Fifer and James Debney, the CEOs of Ruger and Smith & Wesson respectively, have filed Declarations in support of the plaintiffs challenging the Handgun Roster in the long-running case of Pena v. Lindley. This is a case being brought by the CalGuns Foundation and the Second Amendment Foundation in US District Court for the Eastern District of California.

The Declaration of Ruger CEO Mike Fifer can be found here. In it he says that the microstamping requirement is unworkable and that no firearms manufacturer has been able to implement it.

The Declaration of S&W CEO James Debney says that the technology is unworkable and that "the state law requires the technology to perform at a level it cannot." Debney goes on to point out that many of their handguns also do not have mag disconnects and loaded chamber indicators.

These Declarations join the amicus curie brief of Glock, Inc. in arguing against the Handgun Roster and in favor of the plaintiffs' position.

The Second Amendment Foundation welcomed the support from all three firearms manufacturers in a release put out yesterday shown below.

SAF THANKS GUN COMPANIES FOR SUPPORT IN CA MICROSTAMPING CASE

BELLEVUE, WA - The Second Amendment Foundation is expressing heartfelt gratitude today to three major firearms companies - Ruger, Smith & Wesson and Glock - for their supporting documents in the on-going case of Pena v. Lindley, a lawsuit challenging the California handgun roster requirements that include microstamping and magazine disconnects.

Earlier this week, Ruger CEO Michael O. Fifer and Smith & Wesson President and CEO James Debney submitted declarations to the court, explaining their respective companies' positions on the California microstamping requirement. Late last year, attorneys representing Glock, Inc. filed an amicus curiae brief supporting the SAF case.

"SAF will be eternally grateful for the timely support from all three companies, which we believe strongly reinforces our case," said SAF founder and Executive Vice President Alan M. Gottlieb. "The statements from Messrs. Debney and Fifer confirm what we have argued all along, that California's requirements place an undue burden on both consumers and manufacturers."

In his statement, Fifer bluntly observed, "There is no workable microstamping technology today, and Ruger believes that California's microstamping regulations make compliance impossible."

Debney concurs in his statement, noting, "Smith & Wesson does not believe it is possible currently to comply with California's microstamping regulations. Quite simply, the state law requires the technology to perform at a level that it cannot."

In its earlier brief, submitted by attorneys Erik S. Jaffe of Washington, D.C. and John C. Eastman of Orange, Calif., Glock maintained that neither its pistols nor any other handgun in common use can comply with California's microstamping mandate.

"You cannot regulate handguns out of existence or out of the marketplace by mandating technology that doesn't work," Gottlieb observed. "Now three major gun companies have weighed in and we're confident their opinions will carry a lot of weight."

The impact of the microstamping requirement on handguns available for sale in California can be seen in this infographic from the CalGuns Foundation.  It is not a pretty picture and not a Constitutional one in my opinion.

S&W Joins Ruger In Leaving California Market

Smith & Wesson has officially announced today that they are letting their M&P series of semi-automatic pistols drop off the California Department of Justice Handgun Roster. For the time being, the M&P Shield and the SDVE pistols will remain on the roster as the company plans no changes to these pistols and they were added to the list prior to the beginning of 2014.

What I would like to see and, I think most would agree, is for S&W along with Ruger, Glock, and any other supplier of pistols to the law enforcement market in California take the Ronnie Barrett approach to this. That is, if it can't be sold to individuals in California then it won't be sold to law enforcement either. Barrett went further and stopped providing spare parts and repairs as well. 

The official statement from Smith & Wesson courtesy of the Outdoor Wire is below:

SPRINGFIELD, Mass. (January 23, 2014) --- Smith & Wesson Corp. announced today that although it continually seeks ways to refine and improve its firearms so that consumers have access to the best possible products, the State of California is making that impossible when it comes to California residents.

Under California's "Unsafe Handgun Act," any new semi-automatic pistol introduced into that state must comply with microstamping laws. In addition, California asserts that anything other than a cosmetic change to a handgun already on the California Roster of Handguns Certified for Sale, including performance enhancements and other improvements, requires it to be removed from the roster and retested. For semi-automatic pistols, this means it must comply with the microstamping requirements, as well.

Smith & Wesson does not and will not include microstamping in its firearms. A number of studies have indicated that microstamping is unreliable, serves no safety purpose, is cost prohibitive and, most importantly, is not proven to aid in preventing or solving crimes. The microstamping mandate and the company's unwillingness to adopt this so-called technology will result in a diminishing number of Smith & Wesson semi-automatic pistols available for purchase by California residents.

This is not a problem unique to Smith & Wesson. The microstamping legislation and California's position regarding performance enhancements and other improvements creates the same challenge for all firearm manufacturers, since presumably all of them refine and improve their products over time.

Smith & Wesson currently produces a California-compliant version of its M&P® Shield and SDVE™ pistols. Both of these new products were launched last week at SHOT Show® in Las Vegas and are expected to begin shipping within 90 days. They are expected to more than offset the impact of those M&P pistol models that will not remain on the Roster. Both the M&P Shield and the SDVE pistols are expected to remain on the California Roster of Handguns Certified for Sale as long as no changes are made to those models and the company does not plan to make changes to them for this reason. All other Smith & Wesson handguns are at risk of eventually falling off the roster over time. The company expects that any current production revolvers that fall off will be re-tested and returned to the roster, since microstamping does not apply to revolvers. Without some change in position by California, however, any semi-automatic pistols (other than the California-compliant models referenced above) that are removed from the roster will not be returned and law-abiding citizens will not be permitted to buy them from a licensed dealer in California.

James Debney, Smith & Wesson President & CEO, said, "As our products fall off the roster due to California's interpretation of the Unsafe Handgun Act, we will continue to work with the NRA and the NSSF to oppose this poorly conceived law which mandates the unproven and unreliable concept of microstamping and makes it impossible for Californians to have access to the best products with the latest innovations. At the same time, we will do our best to support our customers in California with state-compliant products, enabling them access to at least a portion of the firearms to which we believe all citizens are entitled. In these challenging times, we hope you will support Smith & Wesson, and all gun manufacturers, in our fight to make the Unsafe Handgun Act about safety. We also encourage you to support the NSSF's lawsuit and other efforts to stop microstamping, before it impacts your Constitutional rights."

Unless California changes its position, all M&P pistols other than the M&P Shield, will fall off the roster by August, 2014, due to performance enhancements and other improvements we have made to those firearms. This includes the M&P9c, which has fallen off already and several other M&P models that will fall off by the end of this month. Other models already have fallen off and will continue to fall off for the same reason. Visit http://oag.ca.gov/sites/oag.ca.gov/files/pdfs/firearms/removed.pdf each week for a list published by the California Department of Justice of the handguns no longer on the roster.

California firearms dealers should check the official California Roster of Handguns Certified for Sale frequently, to determine which handguns are certified for sale in California. This list can be found at http://certguns.doj.ca.gov/.

How To Inspect Your M&P Shield

Smith & Wesson has issued a recall on their popular M&P Shield pistols made before August 19, 2013. They have identified a condition whereby the trigger bar pin could damage the lower trigger in such a way as to cause the drop safety feature not to work. If a pistol with this condition were to be dropped, it could fire unintentionally. While S&W thinks this condition may only be present in some more recently manufactured Shields, they are being cautious.

To help determine if your M&P Shield is one of the pistols with this defect, Smith & Wesson has released a YouTube video showing exactly how to determine if the trigger bar bin is not functioning correctly.

Kudos to S& W for not only issuing the recall but posting this video showing owners on how to inspect their pistol for this potential defect. If a picture is worth a 1,000 words, then a video ups that by a factor of 10.

Quote Of The Day

Smith and Wesson (SWHC) released their earnings report for the fiscal year ending April 30th yesterday. With the growth in gun sales over the past three years, you would expect that they did well and they did. Net sales figures for the 4th Quarter were up approximately 38% over the same quarter in the prior year. Fiscal year net sales for 2013 were up 43% over FY2012.

So who should they thank for their sales growth? John Nolte at Breitbart has this to say:

It is hard to judge who Smith & Wesson should thank most: Gun-grabber President Obama, murdered-child-exploiter Piers Morgan, or insufferable-sell-out Joe Scarborough. Or maybe the gun maker should just send a big fat bouquet to all of the media:

JournOlist HQ

Hollowed-Out Volcano Lane

Water Carrier, DC 66666

Actually, Smith & Wesson should be and likely is grateful to a nation of Americans who instinctually understand and appreciate their God-give right to not be bossed around, intimidated, or swayed by a bunch of hypocritical, bossie-pants, fascists who hide behind armed guards in secured high-rises.

 In what is generally a down day for Wall Street, S&W stock is up approximately 5% at midday.

Smith & Wesson Tops The Globe 100

The Boston Globe publishes an annual list which ranks the best performing public companies in Massachusetts. The winner this year probably surprised them but certainly not those of us in the gun culture. It was the 161-year old firearms manufacturer Smith & Wesson which is located in Springfield.

In an article that is mostly unbiased for the left-leaning Globe, they explain why S&W topped the list.

With its sights trained on firearms once more, Smith & Wesson increased profits 14 times over in 2012, netting $66 million on sales of $538.6 million and rocketing to the first position on this year’s Globe 100 list.

‘We went back to what we do best, which is handguns. We divested the security business very successfully and since that point have not looked back.’ - James Debney, CEO, Smith & Wesson

But the company’s renaissance is not merely a case of addition by subtraction. In recent years, Smith & Wesson has ventured beyond its core revolver business, introducing popular polymer handguns and modern sporting rifles.

The latter — often referred to as assault rifles — represent Smith & Wesson’s fastest-growing product line. Sales increased by 85 percent last year, and a line that did not exist in 2010 delivered more than a fifth of the company’s total revenue.

“It’s become an important piece of our business,” Debney said, acknowledging some concern about legislative efforts to ban the controversial weapons. “But at the end of the day, we come back to our core competency, and where we’re strategically focused, in terms of product, is the [military and police] pistol.”

At the moment, civilian sales of polymer handguns outnumber law enforcement sales, 20 to 1. Smith & Wesson only launched a polymer handgun line in 2006, but the company now views it as the main driver of future growth.

Currently, Smith & Wesson is the third ranked firearms manufacturer by number of firearms produced in the US behind Ruger and Remington. Their current order backlog is approximately $668 million which is greater than the previous year's sales.

Smith & Wesson was given a $ 6 million tax incentive to expand their plant back in 2010. That tax incentive required them to hire an additional 225 over the next seven years. They have already met this requirement as they have hired 350 new workers in the past two years to meet the demand for new firearms. Their payroll is now $80 million annually and their total workforce in Massachusetts now numbers 1,500.

There are a number of comments on S&W topping the Globe 100. Most are as one might expect from what JayG calls the Volksrepublik. They include stuff like "Glorifying a company that manufactures guns?" and "Surely there must be a more worthy #1 pick than an assault weapons manufacturer." It is actually rather amusing to watch the wailing and gnashing of teeth over this. I know for certain that the 350 people who have gotten good paying steady work are not among them.

More On The Sale Of The Freedom Group

Last week was somewhat consumed with the vote on Manchin-Toomey and the Boston Marathon bombings. The Wall Street Journal ran a couple of stories about the sale of the Freedom Group by Cerberus. You may remember that Cerberus put the Freedom Group up for sale in December after the Newtown shootings in response to pressure from some major pension funds who were investors.

In the first story dated April 16th, the Journal reports that a bid group is being formed by Stephen Feinberg and other partners in Cerberus. The rationale behind this is to provide a floor in the auction price for Freedom Group in order to prevent lowball offers.

Mr. Feinberg, Cerberus's co-founder and chief executive, and other partners, using their own money, are looking to team up with other investors to place a bid for Freedom Group, the people said. The Cerberus partners would have a minority financial position in the group, according to the people. The partners are reaching out to other wealthy individuals and families to join the bid, the people said.

Cerberus would then form a special committee of investors of the private-equity firm who, along with the Cerberus board, would evaluate any bids. The bidding partners wouldn't be part of that review process. The Cerberus group would withdraw from the bidding if a suitor tops its offer by 10% or more, the people said. The group wouldn't receive a breakup fee.

That story also reports that 16 potential bidders have looked at the Freedom Group's financials. The auction is being run by investment bank Lazard Ltd.

A follow-up story in the Wall Street Journal revealed some of the potential bidders for the Freedom Group who have examined the company's financial information.

Smith & Wesson Holding Corp. and Sturm, Ruger & Co. have asked for detailed information on Freedom Group, the people said. Alliant Techsystems Inc., an aerospace and defense company that also makes ammunition and firearms accessories, has also expressed interest, they said.

While both Ruger and S&W are firearms manufacturers, this would mark the first move into firearms manufacturing for Alliant Techsystems. ATK currently makes Federal and Estate ammunition along with Alliant powder and a whole host of components such as Speer and CCI. While not mentioned, I think it would be conceivable that FN-Herstal which manufactures both Winchester and Browning sporting arms might be interested as well.

UPDATE: Frank W. James has a very perceptive comment over at SayUncle regarding the interest shown by Ruger, ATK, and S&W in the Freedom Group. In essence, they are using the opportunity to examine Freedom Group's books not to buy the company but to compare their costs to those of Freedom Group. In other words, they are getting competitive intelligence for free.

Hornady Steps Up

Like firearms manufacturers Ruger and Smith & Wesson, Hornady, makers of ammunition, components, and reloading equipment, has stepped up to the plate with their own gun rights letter generator. The letter is a bit different than the others but it still can be sent to Congress, the State House and Senate, and other state level officials. More importantly, unlike Ruger and Smith & Wesson, the message can be edited and you can add in your own verbiage.

I know this is not the same as a personal letter that is mailed or faxed. Nonetheless it helps build numbers and numbers are important. The Ruger letter has been sent over 4.9 million times.

Here is their basic message that you can customize as you see fit. The message is stronger and more to the point than either of the letters from Ruger and S&W.

As a voter who believes in the U.S. Constitution, I am writing to express my views on gun control legislation currently being discussed in every level of government. I am one of over 100 million law-abiding American citizens who responsibly owns firearms for target shooting, hunting, personal and home defense, and collecting. I care deeply about the Second Amendment, and I am closely monitoring legislation that would restrict my right to keep and bear arms.

I am saddened by the tragic events in Newtown, Connecticut, but I believe that efforts to impose new restrictions on me, a lawful and responsible gun owner, are misguided and unwarranted. The so-called "Assault Weapons Ban," which for a decade restricted the sale of semiautomatic rifles and limited magazine capacity to ten rounds, did not reduce crime, according to a report by the U.S. Department of Justice. And since the expiration of the ban in 2004, violent crime has declined.

Your focus should be on real solutions to the problem of misuse of firearms, such as strengthening mental health care and improving the quality of data supporting the National Instant Criminal Background Check System (NICS).

Do NOT pass more gun or magazine laws; instead, work to enforce the thousands of gun laws already on the books and help step up prosecution of criminals who commit violence and misuse firearms.

We need to be calling, faxing, and writing weekly to all of our elected representatives. We may not have the billions of Mayor Bloomberg to buy out of state congressional seats but I learned a long time ago that money, though important, isn't everything in politics.

Smith & Wesson Steps Up

First it was Ruger who provided an easy way to contact public officials about gun control. Now it is Smith & Wesson. They now have a page where you can send a pro-gun message to your elected officials in both DC and your state capitol.

I'm glad to see gun companies stepping up for gun rights and not making secret deals with administration officials. I don't think we are going to see Smith & Wesson make the same mistake that they made during the Clinton Administration.

If you haven't used either the Ruger or Smith & Wesson pages to send a message, why not?

And Gun Control Would Have Prevented This How?

Perhaps the gun prohibitionists would care to explain this and how any new gun control laws would have kept these guns off the street.

Truck driver Elliot Perez and his accomplice Michael Murphy were indicted in US District Court in Bridgeport, CT for stealing 111 firearms from Smith and Wesson.

According to the indictment against them, on November 8, Perez had a scheduled delivery of guns to pick-up at Smith & Wesson in Springfield. He was supposed to pick up five boxes of firearms to bring back, but ended up taking an additional three. Driving back down to Connecticut, he allegedly stopped at his Bridgeport home and met with Murphy before bringing the truck to his company’s warehouse in Stratford, where he unloaded only the five that he was supposed to deliver.

The indictment charges that on November 15, Perez and Murphy sold one of the stolen guns to another individual. Five days later, when questioned by ATF special agents, Perez allegedly lied and said that a “black male” at Smith & Wesson had instructed him on which boxes he was supposed to load onto the truck, adding that he had dropped off all of the cases of guns at the company warehouse.

At the time of the two men’s arrests days later, Stratford Police had only been able to recover 28 of the stolen guns.

Charges include conspiracy, possession of stolen firearms, trafficking, and making false statements to a law enforcement officer.

Perez was not an employee of Smith and Wesson. He worked for a trucking company contracted to handle transportation services for S&W.

As The Stock Markets Tumble....

The stock market is seeing an across the board sell-off today. As I write at approximately 12pm EST, all major stock market averages - the Dow, S&P 500, and the NASDAQ - are down approximately 2.3%. Part of it is news from Europe that a recession there is all but a certainty and part is the election results along with the "fiscal cliff".

Coal stocks, as might be expected given Obama's jihad against coal, are down even more.

But guess what two companies are seeing strong increases in their stock prices.

That's right - Ruger and Smith & Wesson. Currently, Ruger (RGR) is up $2.40 or a 5.38% increase while Smith & Wesson (SWHC) is up 77 cents or an 8.14% increase over yesterday. Both of these are pure plays on the firearms market.

The ammo makers Olin (Winchester) and ATK (Federal) are down. However, they have other businesses besides just ammunition production. ATK, in addition to making ammunition, is a significant defense contractor while Olin is a big producer of chlor-alkali.

UPDATE: Bloomberg TV has noticed just how well gun makers's stock is doing today as well.

25 Months And Counting

June 2012 marks the 25th straight month in which the number of NICS checks made during the month surpassed the number from the prior year.

Graphic by NSSF

From NSSF:

The June 2012 NSSF-adjusted National Instant Criminal Background Check System (NICS) figure of 846,437 is an increase of 24.5 percent over the NSSF-adjusted NICS figure of 679,840 in June 2011. For comparison, the unadjusted June 2012 NICS figure of 1,290,210 reflects an 11.4 percent increase from the unadjusted NICS figure of 1,157,714 in June 2011.

Graphic by NSSF

As the NSSF noted, June 2012 was a 24.5% increase over June 2011. However, the difference between June 2012 and the earlier years is very significant. June 2009 and 2010 look to have about 600,00 adjusted NICS checks or a quarter-million less than this year. That is a large difference!

It should be noted that NICS checks are not a perfect correlation with firearms sales but are a strong indication of general trends in firearm sales. Some states such as Kentucky, Iowa and Michigan use the NICS system for their CCW permit application checks as well as checks on active CCW holders. Conversely, in states such as North Carolina where the Concealed Handgun Permit is an approved substitute for a NICS check, purchases by permit holders will not be counted.

I don't think we can know conclusively if this continuing trend in the increase of NICS checks is due to the fear of an Obama reelection or just the rise of Gun Culture v2.0. I do know that strong sales have been reflected in the stock prices of companies like Smith and Wesson. Today, the stock hit a 52-week high at $9.50 per share which reflects a four-fold increase in share price.

Some Pocket Pistols Seen At The NRA Annual Meeting

I looked at a number of the sub-compact pistols today at the Annual Meeting. Patrick, a reader of this blog, was interested in a comparison of the Sig P938 and the Sig P238 in terms of the difficulty of pulling the slide. His mother is disabled, wants a pistol - not a revolver - and has difficulty pulling the slide on many smaller pistols.

To make the test somewhat objective, I had the Complementary Spouse do the testing of the slides. She is a health care professional and has some understanding of the challenges that those with weaker hand and arm strength might face.

First, we tested the Sig P938 which is their sub-compact single stack 9mm pistol. She didn't find it hard at all to rack the slide on the P938. It fit her hand well, had rear sights that allow the racking of the slide against a pocket, and decent 3-dot sights.

Next up was the Sig P238 Scorpion. It was easier than the P938 and was the easiest to rack the slide of all the guns tested today.  It is a single-stack, single action pistol in .380 ACP. The single action trigger pull of both pistols seemed about the same though I didn't test it on a trigger scale.

You can see a size comparison of the P238 and the P938 below. They seem to be relatively the same size.

The third pistol tested was the Colt Mustang in .380 ACP. Many have said that the Sig P238 is merely a clone of the Mustang so it was an obvious choice for comparison. It seems to have a heavier spring than the P238 and is about equivalent to the P938. The sights are similar to a GI model 1911. To me, these sights were less user-friendly than those of the Sig P238 Scorpion.

Finally, given all the buzz about the Smith and Wesson M&P Shield, we thought we should add this to the mix. It is the single-stack sub-compact 9mm (and .40 S&W) version of the M&P. The Complementary Spouse found this the hardest to rack of all the pistols we tested and wouldn't recommend it to Patrick's mother. She had some difficulty racking slide. It fit my hand well but I did find the trigger pull to be mushy and not crisp.

The Stock Market Is Down Today

The headline from the Wall Street Journal at midday is "U.S. Stocks on Track for Third Decline."

U.S. stocks fell after weak economic signals from the euro zone and China raised fresh concerns about slowing global growth.

After rising to multi-year highs in recent days, major benchmarks extended their retreat into a third session on Thursday. The Dow Jones Industrial Average declined 65 points, or 0.5%, to 13060 in midday trade.

Standard & Poor's 500-stock index shed 9.4 points, or 0.7%, to 1393. FedEx FDX -4.29%was among the biggest decliners, after delivering a disappointing earnings outlook and cutting its economic growth forecast. The Nasdaq Composite slid 13 points, or 0.4%, to 3062.

However, you would never know that the stock market was down if you were following firearms manufacturers Ruger and Smith & Wesson.

From Active-Investor.com on Ruger today:

Sturm, Ruger & Company, Inc. (NYSE:RGR) is up 8% today at $45.68. RGR has traded 428 thousand shares this morning, about double its average volume. RGR shares are up this morning after the company announced it was not taking any new orders at this time due to overwhelming demand. The company added that it will begin taking new orders again sometime in May. The company has a market cap of 873.65 million.

And this on Smith and Wesson Holding Corporation from Active- Investor.com under the headline "Market Down Despite Jobless Claims at Four-Year Low, NASDAQ Stocks to Watch":

Smith & Wesson Holding Corporation (NASDAQ:SWHC) is up 10.85% this morning at $7.65. SWHC is up on heavy volume today with 2 million shares traded so far, well above its daily average of 931 thousand shares. Smith & Wesson shares are rallying alongside its rivals today after Sturm, Ruger & Co. announced it has stopped taking new orders due to overwhelming demand. The company has a market cap of 503.52 million.

Investors seem to be pushing up RGR and SWHC while ignoring CSGV and VPC. Go figure.

Investing In Guns And Ammo

With the SHOT Show having just concluded this past week, I thought it might be a good time to look at investing and the gun industry. As NSSF President Steve Sanetti noted in his State of the Industry address at the SHOT Show, the $4.1 billion firearms and ammunition industry is one of the bright spots in the economy.

Eighteen consecutive quarters of sales growth, as evidenced most recently by an all-time high number of mandatory point-of-sales background checks in December, and during the worst recession since the great depression, would be an enviable feat for any industry. Yet we have achieved it...

If, like most investors, you are saying to yourself that you'd like to invest in an industry that is actually doing well in our poor global economy, when it comes to the firearms industry there are very few choices available. The reason is that much of the industry is in private hands and are not public companies. By public companies, I mean those whose stock trades on a stock exchange.

As I noted, much of the firearms industry is in private hands. Companies such as Groupe Herstal (FNH, Browning, and Winchester firearms), Colt, Beretta, Steyr Mannlicher, and the Freedom Group (Remington, Bushmaster, DPMS, Dakota Arms, Marling, H&R, etc.) are all privately held. While the Cerberus-owned Freedom Group may eventually go public, they pulled their Initial Public Offering back in April 2011.

So where does this leave investors?

In the United States, Sturm, Ruger and Company (RGR) and Smith and Wesson Holding Company (SWHC) are the only two publicly traded firearms manufacturers. Worldwide, you can add Forjas Taurus (Taurus firearms) which trades on the Sao Paolo exchange, Manroy PLC (Sabre Defence and military arms) in the UK, Metal Storm Ltd. of Australia, and a handful of Russian companies like Tula Armory.

Ammunition companies in the United States that are publicly traded include Olin (Winchester ammunition) and Alliant Technologies (Federal, CCI, and Speer). Other companies that are involved in the broad firearms and outdoor market would include Cabelas (CAB), the Outdoor Channel (OUTD), and Taser International (TASR).

Let's look a little closer at the two US firearms manufacturers and the two ammo companies.

Sturm, Ruger and Company (RGR) is headquartered in Southport, Connecticut and has factories in Prescott, Arizona and Newport, New Hampshire. Its stock trades on the New York Stock Exchange. In terms of market capitalization, Ruger is larger than Smith and Wesson - $736 million versus $309 million - but has about $100 million less in annual gross revenues. Ruger has been doing well and is on track to become the first firearms manufacturer to sell one million firearms in a one year period. The stock has also been doing well as can be seen in the chart below. Over the last two years, Ruger's stock price has risen 250% and it closed at $38.68 per share on Friday. Looking at the chart, you can see that it significantly outperformed the Standard and Poor's 500 Index.

Smith and Wesson Holding Company (SWHC) is headquartered in Springfield, Massachusetts. They moved their Thompson Center manufacturing to Springfield from New Hampshire. Smith and Wesson also has non-firearms operations in Houlton, Maine and Franklin, Tennessee. The company is also a leading manufacturer of handcuffs and provides physical security products through their Security Solutions division. As noted above in the discussion Ruger, Smith and Wesson has a smaller market cap than Ruger but has about $100 million more in annual revenues. However, when it comes to profitability, Ruger both has a higher profit margin and more profits than Smith and Wesson. The stock price of SWHC reflects this. It closed on Friday at $4.74 per share and is only up about 20% for the last two years. Looking at the chart, you can see its stock price has been very volatile.

Neither of the U.S. ammunition manufacturers, Olin and Alliant Technologies, are solely ammo makers. Olin also makes chlor alkali products which are basic materials used in other industries. Alliant Technologies is a large defense contractor involved in aerospace and missile technologies, armament systems, and small arms ammunition manufacturing for the military.

Olin (OLN) has making powder and ammunition for over 100 years from its beginnings with the Equitable Powder Company and Western Cartridge in East Alton, Illinois. Olin bought Winchester out of receivership in 1931 and has owned it ever since. They spun off the Winchester Arms division to U.S. Repeating Arms in 1981. Currently headquartered in the St. Louis suburb of Clayton, Missouri, they make Winchester ammunition in East Alton, Illinois; Oxford, Mississippi; and Geelong, Australia. Olin has been moving more and more ammunition production from East Alton to Oxford due to union-management issues and a more modern facility. In terms of market capitalization, Olin is valued at $1.7 billion, has gross revenues of $1.9 billion, and net income of $225 million. Its stock closed at $22.20 per share on Friday and it trades on the New York Stock Exchange. Olin's stock price has been volatile over the last two years but it has outperformed the S&P 500 growing 30% in value over the period.

As I noted earlier, Alliant Technologies (ATK) is a major defense contractor. The civilian ammunition component of their business comprises only about 20% of their overall business. Their Security and Sporting Group is comprised of Federal Premium ammo, CCI ammo and components, Speer bullets and ammo, RCBS reloading equipment, Alliant Powder, Champion ammo, Weaver optics, Eagle Industries, and Blackhawk! Industries.Alliant Technologies is headquartered in Arlington, Virginia and has 60 facilities in 22 states, Puerto Rico, and internationally. ATK has a market cap of $2.04 billion, has gross revenues of $4.62 billion, and net income of $292 million. Its stock closed at $61.78 per share and it trades on the New York Stock Exchange. As can be seen from the chart below, it has underperformed the market for the last two years and its stock price has lost 30% of its value.

Of the four companies, Ruger is the purest play in firearms. While the company does own Pine Tree Castings, it only provides about 1% of their revenues. The other three companies are more diversified. This diversification which in normal times would help them seems to have depressed their growth as compared to that of Ruger. With other sectors of the economy not having the robust growth of the firearms industry, this has hurt Smith and Wesson, Olin, and Alliant Technologies.

Because of my day job, I am not permitted to make any recommendations. I suggest that you do your own research, check with your own investment advisor, and go from there if you are interested in investing in the companies of the firearms and ammunition industry.

Disclosure: In the spirit of full disclosure, I own shares in RGR, ATK, OLN, and SWHC. Nothing here should be taken as an investment recommendation nor a solicitation of your business.