Heaven and Hell

There’s an old joke about the definition of heaven and hell in Europe. I first heard it attributed to Malcolm Forbes, but that may be unfair. It goes like this:

Heaven is where the English are the police, the French are the chefs, the Germans are the auto mechanics, the Swiss are the bankers, and the Italians are the lovers. And hell is where the Germans are the police, the English are the chefs, the French are the auto mechanics, the Italians are the bankers, and the Swiss are the lovers.

Europe has changed since the joke was first penned, so apologies to European chefs, auto mechanics, police, bankers, and of course, lovers. I share this because it reminds me of the upside-down nature of heaven and hell in America.

In my view, heaven in America is where corporations focus on creating long term shareholder value, while being thoughtful stewards of the environment and the communities in which they operate. And governments, (local, state and federal) focus on representing the will of the people. To play this out, "hell," then, would be corporations focusing on representing the will of the people and government focusing on profit maximization.

So are we living in hell? The answer is decidedly yes. Check out a recent piece in The Atlantic by Derek Thompson that articulates an emerging “corporatocracy” filling a vacuum left by legislative paralysis.

Thomson reasons that a number of forces have come together to make Parkland more than just another school shooting and big corporations can no longer afford to stand on the sidelines. What’s interesting to me is that it’s not just the 20 or so companies that provided discounts to NRA members that have fled. The NRA/assault weapons divestment movement has expanded to include retailers such as Walmart, Dick’s Sporting Goods, and a division of Kroger taking action. Due to Congress' inability to agree on raising the gun purchase minimum age from 18 to 21, these retailers will do so themselves.

And just yesterday, a Vancouver firm, Mountain Equipment Co-op, announced it will no longer source any product from Vista Outdoor, a gun and ammo manufacturer that sells assault rifles through one of its divisions. The most interesting thing about this announcement is that Mountain Equipment doesn’t sell guns or ammo. They are a health, fitness and outdoor living company, and buy products such as Bushnell binoculars from Vista. Not anymore. A few hours later, REI indicated it would no longer be ordering CamelBak, Bell, Giro or any other of the 50 Vista Outdoor brands to sell in its stores.

As Joe Pinsker points out in an earlier Atlantic piece, "Brands are aware that in a hyper-partisan climate, it can be conspicuous not to weigh in on heated debates."

This particular “hell” makes a lot of sense to me as a values-aligned portfolio manager. There are many ways we screen companies based on off-balance sheet behavior, but #neveragain hasn’t been one of them. It’s tragic that it needs to be, but here we are. A question worth asking is whether this role reversal between corporations and government is just a temporary response to Washington gridlock or the more pervasive politicization of everything in America. If it’s the latter, and I fear it might be, it’s worth considering Delta Airlines, which last week cut ties with the NRA.

Several days before doing so, the Georgia legislature passed a sweeping bill that included in it a jet fuel tax break for Delta and other airlines. The Governor’s motivation for this tax break was to bring more flights into Atlanta and more businesses to Georgia. This tax break is said to be worth $40 million to Delta. Note, Delta is based in Atlanta and is the largest private employer in Georgia.

After news broke that Delta joined all the other corporate sponsors in ending the NRA relationship, Lieutenant Governor Casey Cagle announced he would kill any tax bill that benefits Delta until the NRA discount was fully restored. Feel free to read that last sentence again if it didn’t sink in. An elected official in Georgia is openly putting the interests of the NRA ahead of the economic interests of the State he serves over a measly airline discount to Georgia-based NRA members flying to NRA conventions. Furthermore, this comes at a time when Atlanta is a finalist to attract Amazon’s other headquarters. As you may have guessed, Mr. Cagle is gearing up to run for Governor, so maybe this is all just red meat for his base.

Keep an eye on this race as it will inevitably catch the attention of the #neveragain movement. Mr. Cagle’s campaign may serve as a litmus test as to which way the scales are tipping in this country. Perhaps the intersection of engaged corporations and this incredible activism rising from the tragedy at Parkland will restore heaven and hell to their proper balance.

-Bill Davis
Founder & Portfolio Manager



Thompson, Derek. “Why Are Corporations Finally Turning Against the NRA?” The Atlantic, Atlantic Media Company, 26 Feb. 2018, www.theatlantic.com/business/archive/2018/02/nra-discounts-corporations/554264/.

Pinsker, Joe. “Patagonia, REI, and the Politics of 'The President Stole Your Land'.” The Atlantic, Atlantic Media Company, 5 Dec. 2017, www.theatlantic.com/business/archive/2017/12/patagonia-rei-bears-ears-president-stole/547577/.

Evans, Pete. “MEC Says It Will Stop Selling Products from Gun, Ammo Maker Vista Outdoor.” CBCnews, CBC/Radio Canada, 1 Mar. 2018, www.cbc.ca/news/business/mec-vista-outdoor-1.4557071.

Kosoff, Maya. “Did Republicans Just Give Amazon's HQ2 the Kiss of Death in Georgia?” The Hive, Vanity Fair, 1 Mar. 2018, www.vanityfair.com/news/2018/03/did-republicans-just-give-amazons-hq2-the-kiss-of-death-in-georgia.

Are you funding the AR-15 industry without knowing it?

The AR-15 is an American-made, semi-automatic weapon capable of piercing a steel helmet from 500 yards away. During the civilian massacres of Newtown, San Bernardino, Orlando, Las Vegas, Sutherland Springs, and (most recently) Parkland, Florida, the AR-15 was the killing tool of choice. 

With our current gun laws, legal action against AR-15 manufacturers is limited, however, we can take a stance with our capital investments. Today $17.3B is invested in gun & ammo maker/seller stocks via 2,120 mutual funds and ETFs. As our legislative representatives fail to respond with meaningful action, perhaps divestment can effect change.

Earlier this week, Bloomberg Business broke a story that the Florida Teachers' Pension fund was invested in all three of the publicly traded AR-15 manufacturers- American Outdoor Brands, Sturm Ruger, and Vista Outdoors. 

The largest of the fund's gun holdings was 41,129 shares of American Outdoors Brand valued at more than a half-million dollars. You may know American Outdoors Brand better as Massachusetts-based Smith & Wesson. 

The AR-15 used during the Valentine's Day shooting at Marjory Stoneman Douglas High School was manufactured by Smith & Wesson. 

I am sure that most of Florida’s public school employees are as sickened as I am to learn that the state has invested some of our pension fund holdings in the maker of the AR-15.
Surely there are better places for the state to invest its public employee retirement money than in companies that make products that harm our children.
— Joanne McCall, President of Florida's Education Association

The Florida Teachers' pension is part of the larger Florida Retirement System (FRS) Pension Plan. Unlike a 401k where participants can choose different plans, the Florida Education Association's pension investments are not customizable to the individual. 

The call for divestment in gun stocks will be an uphill battle for Joanne McCall and her association for the simple reason that nothing ever seems to change with respect to gun laws, even though three of the dead in Parkland were presumed participants in the FRS Pension Plan.

But what about the rest of us? Would you be comfortable knowing that you are an investor in an AR-15 manufacturer through your 401(k) or 403(b) or taxable investment account?

Gun stocks can bleed into portfolios in a number of different ways. Here are a few ways you can identify exposure to gun stocks in your own investment portfolio:

  1. Know the players: 
    • Ruger  (RGR
    • American Outdoors Brand/Smith & Wesson (AOBC)
    • Vista Outdoor (VSTO)
    • Olin (OLN)
  2. Investigate your mutual funds:
    • While you may not own gun stocks in the form of individual equities, you may be exposed through your passive investments
    • Good Bye Gunstocks allows you to search among 12,400 funds to determine exposure to gun stocks.
    • Here are a few of the Good Bye Gunstock team's macro findings:
      • $17.3B is invested in gun & ammo maker/seller stocks via 2,120 mutual funds and ETFs.

      • 35% of US stock funds include gun and ammo maker/seller

      • The top 3 fund companies invested in gun stocks are Vanguard, Fidelity and American

And finally, think about whether you want to support companies that provide special benefits to NRA members at a time when the NRA no longer reflects the will of its membership. The following is courtesy of Think Progress and you will note that a bunch of sponsors have already signaled they are terminating their relationship:


Gray, Sarah. “A Timeline of Gun Control Laws in The U.S.” Time, Time, 22 Feb. 2018, time.com/5169210/us-gun-control-laws-history-timeline/.

Mosendz, Polly, and Neil Weinberg. “Florida Teachers Demand Their Retirement Fund Dump Gun Stocks.” Bloomberg.com, Bloomberg, 22 Feb. 2018

U.S. Department of Education, National Center for Education Statistics, Common Core of Data (CCD), "Public Elementary/ Secondary School Universe Survey," 2014–15, Provisional Version 1a, "Local Education Agency Universe Survey," 2014–15, Provisional Version 1a, and "State Nonfiscal Survey of Public Elementary/Secondary Education," 2014–15, Provisional Version 1a.

Florida State Board of Administration.” State Board of Administration - Internet > Home, www.sbafla.com/fsb/.

Choking on Carbon

Choking on Carbon

This past summer CDP, in conjunction with Climate Accountability Institute, released a report detailing that 100 companies have been responsible for ~71% of the world’s greenhouse gas emissions. That’s a staggering number.According to a recent report by George Mason and Yale universities, more than half of Americans (58%) believe climate change is mostly human-caused. As a result, more and more people try to manage the carbon emissions of their lifestyle.