August 29th, 2009

Parent of Remington, Marlin, Bushmaster Suffers Hedge Fund Woes

Over a two-year span (2006-08), Cerberus Capital Management, through its Freedom Group holding company, acquired Remington Arms, Bushmaster, and Marlin Firearms, along with other gun brands. Observers were concerned about the consolidation of so many legendary American gun-makers under one ownership group — too many eggs in one basket. If Cerberus suffers financial setbacks, it was feared, this could have a huge effect on the U.S. gun industry.

Cerberus Capital Management

Cerberus Hedge Fund Investors Jump Ship
Now it appears that those fears may have been well-founded. According to the Wall Street Journal, “Cerberus Capital Management’s investors overwhelmingly want out of the firm’s core hedge funds, asking for the return of more than $5.5 billion, or almost 71% of the fund assets”. That’s bad news for Cerberus of course. However, the Hedge Fund represents only about 1/3 of Cerberus assets, so the overall picture isn’t completely bleak. The Private Equity (PE) Fund, for which Cerberus is most famous, is NOT directly affected by these Hedge Fund issues. Still, the PE Fund is not without its own problems. Cerberus’s investment in Chrysler proved disasterous. After Chrysler went into bankruptcy, most of its assets were turned over to Fiat and the UAW.

What’s ahead for Cerberus? We can’t predict. There’s no reason to believe, at this time, that Cerberus is seriously threatened. Likewise, there may be no immediate effect on the operations of Remington, Bushmaster, and Marlin. However, you can bet that the top Cerberus decision-makers will be taking a hard look at the “bottom line” of all the enterprises Cerberus controls. And that, in turn, could mean a financial squeeze for Freedom Group companies that are not performing up to expections.

Freedom Group Gun Companies:
Bushmaster, Dakota Arms, DPMS, Eotac, H&R, L.C. Smith, NEF, Parker Gun, Remington Arms Co.

CLICK HERE for further Discussion of Cerebus Hedge Fund issues.

Similar Posts:

Tags: , , ,