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Get Ready For Tighter Gun Controls With This 19-Stock Portfolio

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January 8, 2016 9:14 am
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Get Ready For Tighter Gun Controls With This 19-Stock Portfolio

The American society has been debating gun control for years. However, a number of recent mass shootings has made of the topic red hot once again.

Nevertheless, a divided Congress could not decide on the issue, leading to President Barack Obama’s announcement of plans to tighten gun laws. In fact, he assured he was willing to use his executive authority to bypass the House and Senate.

Interestingly, Obama’s plan backfired, as the prospect of tighter gun controls has led consumers to massively buy guns while they still can. So, how can investors profit from this unexpected turn of events? The portfolio below might provide an interesting option.

Motif Investing

Motif Investing constantly looks for “trends, ideas and world events that could create an investment opportunity,” and then picks 10 to 30 related stocks to build portfolios around, weighing them based on their exposure to the coinciding idea, event or trend.

The site has developed a portfolio of U.S.-listed stocks and ADRs of companies that manufacture guns and ammunition, offer private security services and develop security-scanning equipment

Related Link: Gun Industry Boosted By Tension In Washington

It’s A Scary World Out There

The people responsible for the creation of the Guns, Guards and Gates motif explained what they had in mind when they constructed the portfolio.

In a dangerous world where terrorist attacks, mass murders and smaller crimes are all too common, “many American individuals and businesses— not to mention the U.S. government,” are particularly worried about safety. This situation has “left us increasingly vigilant in our hunt for products and security services to keep us safe,” Motif explained.

“Often, after a highly publicized violent incident, government, business, and individual spending on weapons and security-related products and services tend to soar. Which means that, when it comes to keeping the bad guys at bay, price may be no object.”

Performance And Allocation

The Guns, Guards and Gates motif has managed to slightly outperform the S&P 500, having lost 3.7 percent over the past year and 4.4 percent in the last month versus the S&P’s 3.89 percent and 6.25 percent respective losses. So, for those who believe gun and security stocks will continue to outperform the market and even potentially post gains over the next few months, this might be a nice portfolio.

In terms of asset allocation, 58.4 percent of the portfolio’s assets are placed in private security stocks; 26.1 percent in guns, ammunition makers and distributors; and 15.4 percent in screening equipment companies.

Below is a more detailed look at the top stocks in the portfolio. Check out the full motif (and the returns of each stock and segment) here.

An Armed Portfolio

  • Allegion PLC (NYSE: ALLE): 18.9 percent
  • ADT Corp (NYSE: ADT): 18.2 percent
  • Tyco International plc (Ireland) Ordinary Shares (NYSE: TYC): 17.4 percent
  • FLIR Systems, Inc. (NASDAQ: FLIR): 7.8 percent
  • Sturm, Ruger & Company (NYSE: RGR): 6.3 percent
  • Vista Outdoor Inc (NYSE: VSTO): 5.9 percent
  • Smith & Wesson Holding Corp (NASDAQ: SWHC): 5.4 percent
  • OSI Systems, Inc. (NASDAQ: OSIS): 3.2 percent
  • TASER International, Inc. (NASDAQ: TASR): 2.8 percent
  • Cabelas Inc (NYSE: CAB): 2.7 percent
  • Stanley Black & Decker, Inc. (NYSE: SWK): 2.7 percent

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.

Image Credit: Public Domain


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