Through its retirement plan, the University of California has invested millions of dollars in the manufacturer of the assault rifle used in the shootings at Sandy Hook Elementary School in Newtown, Conn., last week.
The UC Retirement Plan has investments amounting to more than $35 million in the private equity firm Cerberus Capital Management LP, the current owner of Bushmaster Firearms International, according to the most recent report of the plan’s holdings from Dec. 31, 2011. Bushmaster is the maker of the weapon authorities said was used in last week’s massacre.
Though Cerberus announced it plans to sell Bushmaster along with a number of other gun manufacturers it owns in light of last week’s events, investors like the UCRP stand to gain from any profits from the sale.
The UCRP funds retirement benefits for thousands of UC retirees and has more than $39 billion invested in various companies and assets.
Since the end of 2007, the UCRP has more than doubled its position in Cerberus. In the past year, the Freedom Group — the group of gun manufacturers including Bushmaster owned by Cerberus — has seen strong growth. During the first nine months of 2012, the group reported a 20 percent increase in revenues compared to same time period in the previous year.
“We have a very small .005 percent investment in the Cerberus Private Equity Fund that holds this investment, which equates to a UC cost of $1.0 million in Bushmaster,” said UC spokesperson Dianne Klein in an email. “Moreover, we have been proactively supportive of Cerberus’ decision to sell its investment in the Freedom Group.”
Representatives from Cerberus could not be reached for comment.
Cerberus was drawn into the spotlight after former New York governor Eliot Spitzer called for investors “either to get out of Cerberus or have Cerberus change the way it runs the gun industry” in a blog post for Slate Magazine.
“If a major union pension fund or university endowment has an investment with Cerberus, it surely doesn’t want to be tarred as a passive owner of the company that sells semi-automatic weapons with no background checks or concern for the use of the weapons,” Spitzer wrote. “Those investors have enormous leverage over the Cerberus. And all those investors collectively, if they spoke with one voice to the management team at Cerberus, could wield vast power.”
The California State Teachers’ Retirement System — one of the nation’s largest pension funds — said it was reviewing its investments in light of last week’s events.
“Our objective is to make sure that both Calpers and Calstrs are scrubbed clean of any investment in any company that makes guns that are illegal in this state and expose our communities to violence and death,” said California Treasurer Bill Lockyer in a statement. “We’re pleased that Cerberus is taking this action but our initiative extends far beyond one company.”
Curan Mehra is the executive news editor. Contact him at [email protected].