2/12/2013 7:00 PM ET|
An anti-gun-control mutual fund
Gun sales soared after the Sandy Hook massacre in December. The corresponding rise in shares of gun makers has been a boon to the investors in the Vice Fund.
In the aftermath of the Newtown, Conn., mass shooting, mutual fund manager Gerry Sullivan scooped up shares of Smith & Wesson (SWHC). After gunman Adam Lanza opened fire in a Newtown school, shares of the U.S.-based gun manufacturer took a hit. As investors yanked money from the company, Sullivan saw a buying opportunity.
For Sullivan, this purchase was hardly unusual. Sullivan manages the aptly named Vice Fund (VICEX). The fund's investing strategy is premised on the notion that vice -- or at least owning shares of companies in "vice" industries -- pays. As such, the fund's portfolio is loaded up with shares of companies in the alcohol, tobacco, firearms, gaming and defense industries.
Though Sullivan is open to investing in companies across the vice spectrum, the fund currently has a tobacco bias. Indeed, as of the end of 2012, its top three holdings were Altria (MO), Philip Morris International (PM) and Lorillard (LO). Together, they account for more than 15% of the portfolio. Companies with ties to the gaming industry, such as Penn National Gaming (PENN), MGM Resorts International (MGM) and Wynn Resorts (WYNN), also enjoy prominent spots in the fund.
As for firearms, the fund has exposure to Sturm, Ruger (RGR) addition to Smith & Wesson. So far, both companies have added value to the portfolio. For instance, when Sullivan bought Smith & Wesson, the stock was trading at $8.03. On Monday afternoon, it closed at $9.13.
Despite its post-Newtown dip, Smith & Wesson has been on a tear, with growth fueled largely by increased sales stemming from concern among gun owners that future gun-control regulation will hurt their ability to purchase weapons. In 2012, for instance, the company's share price grew by upwards of 93%. "What's definitely going to be interesting is to see the next quarter sales," Sullivan says. "Without a doubt, it's beyond anecdotal to know that significantly more guns have been sold (recently)."
As for the other industries in his portfolio, Sullivan is optimistic about tobacco and alcohol. Looking ahead, he is skeptical about the health of the economy. That, in turn, leads him to favor those two industries, which tend to hold up fairly well during rough periods. "The good news is that tobacco and alcohol tend to be defensive," he says. "They're somewhat less influenced by economic (conditions). (Regardless of the state of the economy, people) tend to smoke . . . and they tend to drink."
By contrast, one of the wild cards in the fund's portfolio is its exposure to defense contractors. With yet another looming sequestration battle, it is conceivable that some of the companies the fund is invested in will see their government contracts scaled back. "Defense is a crapshoot," Sullivan says.
Overall, the past few years have been profitable for Vice Fund's investors. As of the end of last month, the fund's trailing three-year returns landed it in the top 2% of Morningstar's large-blend category. Over that period, it beat the Standard & Poor's 500Index ($INX) by an average of around 5.5 percentage points per year.
Meanwhile, in each of the past three years, the fund has beaten the cumulative return of the MSCI Global Socially Responsible Indices -- an irony that is not lost on Sullivan. "It's ironic that an anti-socially responsible fund would (outperform) where a lot of these socially responsible (investments) don't," he says.
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All those that hate guns should be required to put a sign in their front yard attesting that theirs is a gun free property. Sleep well.
The only way to stop the gun violence of crazy people is to kill them on the spot. How do you do that?
With a gun.
On the subject of clip capacity restrictions. Recently there was a home invasion not far from my house. Four armed men invaded a families home, injuring them, terrorizing them and stealing their valuables. Just random luck that these thugs did not kill them.
Facing four armed intruders in your home with a combined fire power of over forty rounds, let me ask everyone. Would you prefer to protect your family with a high capacity clip or a clip restricted to seven rounds?
No Worries your homeowners insurance will cover most of those losses... and keep me coming back for more. Thanks being anti-gun and making my job so much easier. .
Tom~ Your neighborhood home invasion specialist
Gun control, you know there is more at stake here than just "Gun Control". It is a matter of our government blatantly violating the 2nd Amendment of the Constitution. Not only is it a direct violation of that, it directly reflects on the 1st Amendment, Freedom of Speech. Just say one negative thing on a public web site about the renter on Pennsylvania Ave and see how fast one of the hired hench men show up at your door. Go even further, with gun control, as they plan to take your arms, federal agents, then will come a direct violation of the 4th Amendment, unreasonable search and seizures because the big boys will be coming to take your guns. Now that will lead to violations of the 5th Amendment, you will be "required" to tell where your guns are and surrender them or be arrested for violating a federal law. You will no longer have the right to remain silent. The court system will then be so over burdened that your 7th and 8th amendments will be violated, The right to a speedy trial and prohibited excessive fines. The feds will probably cease all of your property and fine you heavily for interfering in so called justice. See the trickle down effect.
Hitler's rise to power, disarm the people, control the industry, control the health system, control the educational system, get as many people as possible totally reliant on government, promise them every thing, reshape the military with your hand picked leaders, sound familiar? Wake up America boot straps and lock step is coming your way and you are just setting around like sheep watching it happen.
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