Meet the Hedge Fund Managers Turning a Profit on the Sandy Hook Massacre

[New York, NY] It has been argued that capitalism, if given the opportunity, would devour its own legs and collapse upon itself.  Putting all hyperbole aside, what would you do if you learned that a US company was actively monitoring national tragedies like the shooting at Sandy Hook Elementary School, only to develop reflexive investment strategies designed directly to capitalize off the pain, suffering and hysteria, in the wake of those events?  Would you be in disbelief of such wanton disregard for life? Would you chalk it up to business as usual, for Wall Street’s most parasitic actors? Or, would you take action to stop it?

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Enter, Stage Left — Two of the Worst People in the World…

While some of the nation’s largest hedge funds and money managers have paused in the wake of Sandy Hook to review their portfolios for exposure to gun stocks, and in some cases begin the process of selling off their gun assets, two hedge funds have done just the opposite. Jeffrey Altman, Founder and Portfolio Manager for Owl Creek Asset Management, and Robert Bishop, of Impala Asset Management, each seized an opportunity in the days following the Sandy Hook Shooting, to purchase millions of shares in gun stocks (1,616,300 shares [valued at $13,642,000] and 893,938 shares [valued at $27,787,000], respectively). Notice of Altman’s and Bishop’s purchases only became available when they disclosed their fund’s 4th Quarter 2012 holdings to the SEC, in February [HERE, and HERE]. Altman’s and Bishop’s intentions, as deduced by peers in asset management, are to turn the fears and murmurations of new gun regulations into profits, as a newly fabricated demand for firearms like the Bushmaster .223 Caliber Assault Rifle, the AR-15 and the Ruger Mini-14—each potentially at risk of regulations—outpaces their supply on shelves at retailers.

Jeffrey Altman: Chronically Single, Economically Depraved…

Jeffrey-Altman_Owl-CreekDepicted by his Bridgehampton neighbors as a man who is “chronically single” and meticulously decorates the walls of his 7.9 million-dollar Ambleside Lane home with “series of Warhol-esque prints of semi-nude women,” Jeffrey Altman is not just the ‘Fox of Finance’ flirtatiously depicted in his 2010 New York Magazine profile, he is also a deeply cynical person known for making morally bankrupt decisions for profit.  Altman began his career in 1985 as an assistant to Michael Price at Heine Securities. It was at Heine that Jeffery made a name for himself by profiting off of distressed assets. In 2001, just as he was about to make the transition to managing his own fund (Owl Creek), Jeffrey commented in a Forbes Magazine roundup titled ‘Let us Prey’ wherein he gave advice to fellow “vulture” capitalists…

“Even the smaller-time vultures, with $50 million to $100 million under management, have to focus on a smaller number of opportunities” — Jeffrey Altman

The fact that Altman uses the term “vulture” when referring to his peers should be telling in itself, but it is how he sees “opportunities” that is the most noxious. When most of the nation was drowning in grief in the days that followed the Sandy Hook shooting, Altman saw an “opportunity” to profit off the murder of the 6 Sandy Hook faculty and 20 elementary school children.

On Friday December 14th, 2012, at approximately 9:32am, just two minutes after the opening bell at the New York Stock Exchange, Adam Lanza exited his black Honda Accord outside of Sandy Hook Elementary School. Before entering he shoots out the school’s glass double-door entrance. As Lanza begins shooting children inside, 77 miles away on Wall Street, brokers are buying and selling shares of the Smith and Wesson Holding Company (SWHC) for $9.54 a share. By days end 28 people would die, including Lanza and his mother, and shares of SWHC would see a decrease to $9.13 per-share.

It would not be until after the weekend that SWHC would take their biggest hit.

During the weekend of December 15th, 2012 every media outlet was saturated with coverage of the massacre. By Monday morning many investors will express a crisis of conscience in owning shares of SWHC, the manufacturer of the AR-15 Assault Rifle (Lanza’s Bushmaster Rifle was modeled after the AR-15). By Tuesday, December 18th, 2012, SWHC would fall to a 6-month low of $7.79 per-share. This is where Jeffery Altman seizes his “opportunity.”

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Altman’s process is to purchase equity in a distressed company if he feels its listing is undervalued or if he feels he can advocate for the companies listing to reach a higher value. Applying this process, Altman, on-or-around Tuesday December 18th, paid approximately $12,590,977 to acquire 1,616,300 shares of SWHC, the supposition being that it was only a matter of time until the national debate over gun control—reinvigorated by the tragedy at Sandy Hook— would trigger an avalanche of gun sales, specifically at-risk guns like SWHC’s AR-15. In practice, Altman’s morally bankrupt process has already turned a profit. Should Altman decide to sell his stake today, he could receive approximately $14,886,123, which would pay out an approximate profit of $2,295,146. The fact that Altman has not already sold his shares should indicate that he believes that SWHC will continue to appreciate in value, regardless of any investors jumping ship after Sandy Hook.

swhc graph

The Wolf in the ‘Riding Hood’ Stories…

On the evening of December 14th, 2012, while Sandy Hook Elementary School is cordoned off with yellow tape, 30 miles away in New Canaan, Connecticut, an exhibit at the town’s historical society, titled “Seeing Red” celebrates a piece of predatory folklore. The exhibit provides a historical overview of the many versions of the “Little Red Riding Hood” story, with gleeful emphasis on the older, lesser-told versions of the story wherein Little Red and her grandmother suffer a far more gruesome fate, each being ravaged by the wolf. The primary sponsor of the exhibit is Robert Bishop, a New Canaan resident and portfolio manager of Impala Asset Management (pictured holding an anthology of ‘Little Red Riding Hood’ below).

robert bishop

Robert Bishop belongs to the same predatory class of investors as Jeffrey Altman. Like Altman, on-or-around Tuesday, December 18th, 2012 Bishop pounced on an opportunity to purchase 346,252 shares of the Smith & Wesson Holding Company (SWHC) and 547,686 shares in Sturm Ruger & Co (RGR) [valued at $2,922,000 and $24,865,000, respectively]. Sturm Ruger, manufacturer of the Mini-14 semi-automatic rifle used by Anders Breivik in the 2011 youth camp massacre on Norway’s Utøya Island that killed 69 people and injured 110, also hit a 6-month low price of $40.60 per-share on December 18th, 2012 and has seen a steady increase in value thereafter. In the wake of the Norway massacre and the theatre shooting in Aurora Colorado the AR-15 and Ruger Mini-14 have been stigmatized as weapons of choice for deranged mass murderers. The fact that anyone—let alone someone who lives a short distance from Sandy Hook Elementary School—would seek to purchase positions in these manufacturers and hedge their bets on a future inflated value, means that they have to be able to either turn a blind eye to the horrific realities tied to those stocks, or that they are literally Wall Street’s own manifestations of the predatory monsters depicted in fairy tales. Any psychologist would have a field day attempting to analyze why a predatory investor like Bishop has such an affinity for a tale of a wolf brutalizing a young girl.

“Activist” Investing?

The term “activist investing” is used in Bishop’s and Altman’s “vulture” community, largely when referring to instances when a hedge fund like Owl Creek purchases a large portion of a company’s equity in an attempt to manipulate the boardroom workings of that company (install a board member, replace management, etc) but there is also a less talked about, media-related, element to hedge fund advocacy. In order to navigate tricky insider trading laws, hedge funds use a “heard it from a friend” style when scooping stock picks to the financial blogosphere. While Altman seldom responds to media requests, he does not think twice about scooping financial bloggers about a company he wants to send droves of investors to. In the example of SWHC, the scoop was picked up by Brian Nelson’s online financial analysis service, Valuentum, who on March 6, 2013, published a syndicated online report on SWHC’s momentum titled ‘Smith & Wesson Rides the Gun Boom’ the following is an except from Valuentum’s report…

“Gun manufacturer Smith & Wesson (SWHC) announced fantastic third quarter results, as demand outpaced supply. Revenue increased 39% year-over-year to $136 million, handily exceeding expectations. Earnings, adjusted to reflect continuing operations, more than tripled year-over-year to $0.26 per share, exceeding consensus estimates.

We’re not surprised by the results, as other firms like Cabela’s (CAB) and Big 5 (BGFV) reported that gun sales have surged in the wake of the Sandy Hook tragedy and fears of new gun regulations. The trend looks durable at this point, and with the general lack of compromise in Congress, we think it could take awhile for any new national gun legislation to surface.”

Republicans Secretly Cheering for Gun Control?

We should be careful not to conflate Altman’s and Bishop’s intentions with the heated and largely partisan debate surrounding our nation’s abusive relationship with the gun industry. A review of the FEC’s records of 2012 political contributions shows that most of the principals of the 20 hedge funds that hold significant gun investments also contribute large sums of money to Republican candidates, but the fact that they identify as Republican does not, in all cases, spell blind allegiance to the gun industry.

Cerberus Capital Management, owner of the single largest portfolio of gun company assets and whose predominantly Republican board includes former Vice President Dan Quayle, made a statement to the press, four days after the Sandy Hook shooting, that they would begin the process of selling their 94% stake in “The Freedom Group,” a gun manufacturer portfolio valued at ~$700-957 million, which includes nearly the entire private equity of Bushmaster Arms (manufacturer of the .223 caliber assault rifle used by Sandy Hook shooter, Adam Lanza). Similarly, Tiger Global Management, CEO Chase Coleman, named the “hottest money manager on the planet” by Forbes Magazine, and a significant contributor to the GOP, showed no hesitance in quickly (albeit quietly) selling all of his 800,000 shares in Sturm, Ruger following Sandy Hook.

Similarly, both Jeffrey Altman and Robert Bishop donated significant amounts of money to Republican candidates in 2012, but unlike Cerberus Capital and Tiger Global, Altman and Bishop are both buying in when the largest players are bowing out, and a key ingredient in their profit making formula IS gun control (or at least a perceived threat in the marketplace of future gun regulations). Both Altman and Bishop need the looming specter of gun control to provide the momentum needed to watch their positions in SWHC and RGR steadily climb. Even more telling is the indication in Valuentum’s report that due to the dysfunction of congress, any regulations may take some time to manifest, and until then the price will steadily climb, unless someone steps in to do something about it…

Holding the Monsters Accountable…

As you read this Jeffrey Altman and Robert Bishop will have already made millions of dollars in profits from Sandy Hook. They are only able to do this because they are accustomed to having no one hold them accountable for their economic depravity. Utah Phillips, a celebrated singer-songwriter and environmental advocate once said, “the earth is not dying, it’s being killed, and those who are killing it have names and addresses.” Indeed Phillip’s words seem all too appropriate when applied to the case of these two hedge fund managers who have decided to turn a profit off of Sandy Hook. Altman and Bishop are proof positive that monsters are real …and they summer in the Hamptons.

These men should be viewed as no less a threat to our communities than sex offenders, and should be ostracized by their colleagues and neighbors no differently than sex offenders.

Compiled below is a list of contact information for Owl Creek, Impala, Jeffrey Altman and Robert Bishop, as well as ways you can contact their colleagues to politely inform them about Altman’s and Bishop’s efforts to turn Sandy Hook into a profit.

We demand nothing short of a complete sale of their positions in SWHC & RGR with any profits made from their sales donated to the families of Sandy Hook victims.

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OWL CREEK ASSET MANAGEMENT»

(please make polite phone calls, and do not say anything that can be misconstrued as threatening, no matter how angry you are, also, please only call each number once)

Owl Creek Asset Management
640 Fifth Avenue, 20th Floor
New York, NY 10019
Phone: 212-688-2550

(please phone them and ask them to sell their position in the Smith & Wesson Holding Company [SWHC])

Jeffery Altman
Portfolio Manager, Owl Creek
205 East 22nd Street, 2M
New York, NY 10010-4622

 

(please consider making a polite phone call to Jeffrey’s neighbors at The Gramercy Park Habitat to let them know that he is turning Sandy Hook into a profit. For a complete listing of tenants in his building click HERE)

Jeffrey Altman
Portfolio Manager, Owl Creek
19 Ambleside Lane
Bridgehampton, NY 11932

 

(please consider making a polite phone call to Jeffrey’s neighbors on Ambleside Lane to let them know that he is turning Sandy Hook into a profit. For a complete list of his neighbors click HERE)

Daniel Sapadin
Chief Operations Officer, Owl Creek
400 E 89th St, #15K
New York, NY 10128
Home Phone: 212-987-2825

 

Use LinkedIn?
If so, you can send Jeffrey Altman an InMail HERE, Also consider sending InMail to all of the other employees of Owl Creek HERE to let them know that their boss, Jeffrey Altman, is turning a profit on the Sandy Hook massacre.

IMPALA ASSET MANAGEMENT»

(please make polite phone calls, and do not say anything that can be misconstrued as threatening, no matter how angry you are, also, please only call each number once)

Impala Asset Management
Headquarters
134 Main Street,
New Canaan, CT 06840
Phone: 203-972-4100
Fax: 203-972-4101

(please phone them and ask them to sell their positions in the Smith & Wesson Holding Company [SWHC] and Sturm Ruger [RGR])

Impala Asset Management
Manhattan Office
100 Park Avenue
New York, NY 10017
Phone: 212-625-1000

(please phone them and ask them to sell their positions in the Smith & Wesson Holding Company [SWHC] and Sturm Ruger [RGR])

Robert Bishop
Managing Principal, Impala
628 West Road
New Canaan, CT 06840
Home Phone: 203-966-1129

 

(please phone Robert and ask him to sell his positions in the Smith & Wesson Holding Company [SWHC] and Sturm Ruger [RGR])

The New Canaan Historical Society
nchistory.org
email: newcanaan.historical(at)gmail.com
Phone: 203-966-1776

(Please send a polite note letting them know that their sponsor, Robert Bishop has attempted to turn Sandy Hook into a profit, and ask that they talk some sense into him.)

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Comments

13 Comments so far. Leave a comment below.
  1. Whyawannaknow,

    They are trying to make a profit off of financializing a human disaster. And that’s EVIL!

    I put trying to get rich off of a Carbon pollution trading system in EXAXTLY the same category.

  2. CityguyUSA,

    If you don’t like what capitalism produces then you need to change the system. Stopping one or two people from profiting on Sandy Hook is nothing in comparison to Goldman profiting on the entire financial crisis by investing against their own customers.

  3. johnathan wright,

    This article is wrong on many levels. First, these hedge fund managers are in no way fueling violence or condoning such behavior, they are simply betting against a stock based on an event that occurred. They do these types of bets on many companies based on many events and their understanding of what the stock will do. The fact that the event was a sad and horrific one is in no way related to their decision to purchase stock or not. Second, this article however IS fueling violence by providing the addresses of these individuals for any lunatic to act upon. Shame on you for this.

    I googled these addresses and came up with charity events….good job.

    • Author admin,

      Jonathan,

      1st.) They are betting on (not against) the stock. They are not selling short in anticipation that the stock will go down, they are anticipating a steady increase.

      2nd.) No one is saying that these individuals are investing in the shooters and those directly perpetrating the violence, instead, that they saw a horrific event as a means to generate profit, which is deeply problematic, and an example of a systemic problem in capitalism.

      3rd.) No one is encouraging violence be taken against these people. The purpose is to pop their privacy bubble, and show them that they cannot make deplorable financial choices in a vacuum devoid of accountability. I would argue that almost no one on wall street would make the choices that they did if their neighbors were to find out, simply because they would be (and should be) ashamed.

  4. Guenther Lipsky,

    Hi, I read your article with interest, because I take ethics very seriously, and I have been considering buying SWHC. My ethical reasoning is firstly, that Smith & Wesson do not need the money right now, they are rolling in cash, so they will not need to raise any by selling equity, and secondly, they do not offer dividends, and instead reward their shareholders with stock buybacks. So if I support the price of SWHC by buying some of it, it doesn’t help them in any way (they don’t need to sell equity right now) and it actually hurts them a bit (it raises the price at which they can buy back stock.)

    Generally, the stock market seems so disconnected from reality these days that I see little ethical consequence to anything I do there. As Keynes said, picking stocks is like judging a strange kind of beauty contest where your objective is to pick the person that everyone else is going to think is the most beautiful. As long as there’s no financial consequence for the company you’re trading, where’s the harm in that? My financial reasoning for buying SWHC is that I think the price still has further to run, because gun sales are getting more and more frequent. I think this is tragic, and bound to lead to further massacres, but I don’t actually see how I’m contributing to that harm by participating in the stock market game. So if you could outline specific harm resulting from these trades by Altman etc., I would take that into very serious consideration when deciding whether to buy SWHC.

    If your position is instead that Altman etc. are ruthless bastards who obviously put these trades on with no consideration for the ethical consequences so it doesn’t really matter what the actual consequences are, odds are you’re right.

    • Author admin,

      I am not sure if your “drop in the bucket” or synthetic value arguments really matter when companies with inflating share prices often get loans from institutional investors, that will (in this case) allow them to produce more guns to fill an exponential demand, and thus make more profit. The result is more guns on the street, quicker, and more money for both the manufacturer and the shareholder who decides to sell.

  5. Sheldon Liberman,

    Is the author of the article suggesting that gun manufacturers should close their doors in the wake of a tragedy? If not, their shares have to trade, by someone if not the likes of Altman. Maybe the ridiculous indictment should be extended to apply to everyone who bought shares in SWHC and similar firms. Moreover, does the author not realize that the first principle of investing is to allow your emotions interfere with investment decisions. How fair would it be to Owl’s unitholders if anything but optimal investment strategies be employed?

  6. Steve,

    What a bunch of tripe. Attempting to smear these investors based on moral “high ground” arguments is laughable.The underlying supposition seems to be that there would be no more firearms related crime if the stock price of these companies went to zero. Therefore no one should buy these companies. How quaint and how utterly delusional. The line of thinking is so far off the beaten path I cannot even conjure up a fitting analogy.
    I applaud these investors for seeing an opportunity and seizing it. That’s what money managers do. They are astute enough to realize the underlying issue in all of these mass murders is the person pulling the trigger, making the bomb or slashing with the knife. Unfortunately it seems there are more than a few in our houses of congress that share this same line of thinking if for nothing more than to firm up their voting base.

  7. Joe,

    This article is deplorable. You should be ashamed of yourself. This is sensationalist journalism at it’s worst. I don’t think i’ve read a worse piece of journalism in my life. Even rush Limbaugh has higher standards.

    Funny how first thing people do when a tragedy happens is try to blame the tragedy on people who had nothing do with it. First publishing a list of people with registered guns, now people who buy stocks in gun companies? what is this? the McCarthy era all over again?

    There is absolutely nothing wrong with profiting from disaster and tragedy. It is the natural order of things. The laws of supply and demand do not grind to a halt because a few kids got killed.

    Read “shock doctrine” by naomi klein. Half the book is about profiting from disaster. It’s happening constantly on a massive scale. This is but a single molecule in a drop of water in a huge lake.

    And do you honestly think your article is going to bring accountability to these people? They don’t care and never will. They will make money by any means necessary. There are an infinite number of financial practices that are several magnitudes worse than this, and you chose THIS?!

    • Author admin,

      @Joe,

      No one is blaming the tragedy on them, were just sharing the fact that they capitalized off of it. If you see no wrong doing in doing so, then you simply lack a moral compass, but that does not make this sensationalist.

      Lastly, we have brought accountability to many targets larger than these two guys, so yes we’re confident they are going to jump ship too. Thanks for being part of that process!

      Google our background, we’re accustomed to winning.

  8. Joe,

    Admin, you are sensationalist because you are trying to make a connection where there is none. These guys did not “capitalize off tragedy”. They simply saw an opprotunity and took it. It just so happened that the opprotunity came on the tail end of a tragedy. You are trying to make connections that simply do not exist.

    Three facts:

    1. I made over $200,000 off a $35,000 investment in gun companies in the month following sandy hook.

    2. I know who you are, you know me, but you will never find out which one of your friends I am. We have many, many, mutual friends. I discovered this article via your facebook post about it. No one, including you, has ever considered me morally corrupt.

    3. Nothing you say or do will change the fact that disaster speculation is profitable for those who partake in it. No one will stop because your faulty logic is at the top of an article and their names at the bottom. NO ONE. I promise you that.

  9. joe,

    Perhaps you should write an article explaining why you think guns are immoral.

    Investing in guns would only be immoral if guns were immoral. I do not consider the ability to own a gun immoral. I own plenty. I even bought a few extra after sandy hook….they were on sale. The store was holding a “sandy hook sale”. Guess what? there was a line around the block. That’s not immoral either. Guns did not suddenly become immoral just because one psycho used them to kill people.
    Psychos have been using guns to kill people for centuries. The morality of owning a gun, an inanimate object, is still the same.

  10. Jay,

    Fist off, aren’t they just going by the principles of investing in the stock market? This article is focused on two people who did something that plenty of other people do everyday, looking at how events will affect the market. I hope the author is also against the principles of investing and other people who do the same thing everyday and not just the two individuals mentioned. Second, if you are going to post phone numbers and addresses for someone so that others can contact and harass them, at least have the guts to put your own phone numbers and addresses for people to do the same to you (coward).

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