CalSTRS Statement on Investment in Freedom Group
CalSTRS expresses disappointment at the lack of a sale
WEST SACRAMENTO, Calif. – The leadership at the California State Teachers’ Retirement System (CalSTRS) today expressed its disappointment that gunmaker, Freedom Group, has not been sold as the nation marks the eve of the anniversary of the tragedy at Sandy Hook Elementary School. CalSTRS Chief Investment Officer Christopher J. Ailman issued the following statement:
“The devastation at Newtown, Connecticut a year ago remains a poignantly sad mark to the CalSTRS staff, who serve public school educators—people dedicated to the lives of children, just like the staff at Sandy Hook Elementary School. CalSTRS is disappointed that good faith efforts of Cerberus Capital Management to sell the gunmaker Freedom Group, which manufactured the weapon used in the shootings, have yet to yield results.
“The process has proven to be more time-consuming than expected, but we believe Cerberus will balance its desire to sell the company with its fiduciary responsibility to all the investors in their funds, of which CalSTRS is but one of many. CalSTRS, in turn, has a fiduciary duty to assure that our actions do not adversely impact the financial interests of the more-than 862,000 members we serve.
“The CalSTRS Investment Committee moved rapidly in January 2013 to direct investment staff to begin the process of divesting of any and all companies that manufacture firearms illegal for private citizens to purchase in California, such as the assault-style rifle used at Sandy Hook Elementary, in accordance with its Divestment policy. In April, after final board approval, CalSTRS sold its interests in two public companies – Sturm Ruger and Smith & Wesson, valued at nearly $3 million.
“However, in the private equity area, CalSTRS is a limited partner, one of many clients of Cerberus, which has day-to-day control of its funds, buys and sells companies under its investment strategies, and makes decisions about fund management.
“Indeed, Cerberus informed us three days following the Newtown incident of their intent to sell Freedom Group, and has been working to line up a buyer ever since.
“CalSTRS staff is exploring all of its options as a limited partner. We will continue to actively engage with Cerberus to help them realize their promise. CalSTRS investment staff has been in conversation with Cerberus leadership for the past year. We’ve had several face-to-face meetings with Cerberus this fall and have remained actively engaged with the company. In our view, Cerberus has been working diligently to find a solution that would allow investors like CalSTRS an exit from investment in Freedom Group.
“As the nation marks this tragic anniversary, the CalSTRS staff mourns with the nation and we remain committed to supporting the sale of Freedom Group.”
The California State Teachers’ Retirement System, with a portfolio valued at $176 billion as of October 31, 2013, is the largest educator-only pension fund in the world. CalSTRS administers a hybrid retirement system, consisting of traditional defined benefit, cash balance and voluntary defined contribution plans. CalSTRS also provides disability and survivor benefits. For 100 years, CalSTRS has served California’s public school educators and their families, who today number 862,000 from the state’s 1,600 school districts, county offices of education and community college districts.