The firearm industry was riding high during the run-up to the 2016 U.S. presidential election.

Former first lady, senator, and secretary of state Hillary Clinton was favored to win, and a wide array of gun advocates warned of a looming Second Amendment crackdown. Earlier that same year, then-President Barack Obama stoked similar fears by proposing to expand federal background checks for purchases.

That year, firearm purchases soared.

But President Donald Trump’s upset over Clinton seems to have helped in reversing all that.

Fears of a crackdown have tapered off under a president who calls himself a “true friend” of the National Rifle Association (NRA). And gun sales have tapered off, too.

It’s against this background that, exactly one week ago, legendary gun manufacturer Remington Outdoor Company said it would file for Chapter 11 bankruptcy…

The 200-Year History of Remington

Remington has rightfully earned its title of America’s oldest gunmaker.

For two centuries, it’s been a totem of America’s gun culture — a name emblazoned on frontier flintlocks and U.S. Army .45s.

Its origins can be traced back to 1816 when Eliphalet Remington II, the son of a blacksmith, worked with a local gunsmith to create his first extremely crude flintlock rifle.

It wasn’t too long before he was selling guns all across the country. In 1828, he situated its final headquarters in Ilion, New York.

At this time, his company became known as the Remington Arms Company.

He spent the next few decades perfecting his craft and making increasingly better firearms — some of the best in the world. The company received its first contract in 1845 for manufacturing 5,000 Mississippi rifles for the U.S. military.

Remington has had a very strong hand in every American war since its existence, particularly in the Civil War, World War I, and World War II. And it’s made firearms for all of the U.S. military branches.

During peaceful times between wars, the company placed its focus on specializing its hunting lines.

In the ’50s and ’60s, Remington branched into many other non-gun-related products. But its main line of expertise and products has always remained in exceedingly high-quality guns and ammunition.

It has also remained the primary producer of guns for multiple international military forces.

Today, it employs over 3,500 people and remains the largest American manufacturer of ammunition and firearms…

The Guns of Bonnie and Clyde

The infamous legend of Bonnie and Clyde embodies the true American outlaw.

We’ve passed the time in our country where we glorify our outlaws — and for good reason, too. But we won’t get into that now…

The ’20s and ’30s were especially hard times for the American people. The so-called “Roaring ’20s” and “Lawless ’30s” were times of great social change and economic unrest because of all its attendant problems.

Bonnie Parker and Clyde Barrow — the mythic lovers born into one of the hardest, most unjust times in our nation’s history — came of age in a wasteland of failed banks, hunger, and the very earth blowing itself away in suffocating clouds of dust. They were not heroes at all. Far from it, actually.

But there are, perhaps, no two outlaws in American history who have captured our imaginations so completely.

They were hyperaware of their own hell-bent legacy during their short years of banditry, endlessly photographing themselves in a worship of weaponry, hard-bitten youth, and anarchic V8 freedom.

They wore expensive clothes and three-piece suits while most Americans wore rags. They drove at top speeds in the newest of their stolen cars while most of their family plowed behind mules.

From gang formations and state-hopping to robberies and murderous shoot-outs, Bonnie and Clyde couldn’t have made it as the stuff of legends without the help of their idolized arsenal of weapons.

While Clyde was fond of his Browning Automatic Rifles (BAR) because of their high rate of power and their .30 caliber bullets’ ability to pierce automobile bodies, Bonnie coveted her Remington Model 11 semiautomatic sawed-off shotgun.

There are many infamous pictures of Bonnie and Clyde with her brandishing her favored firearm, lavishly indulging in their ill-begotten fame.

She kept it in the floorboards on her side of their blood-spattered, bullet-hole-ridden 1934 V8 Ford “Death Car” for whenever they were ambushed.

The Barrow Gang was involved in five major gunfights with the law — always outnumbered but never outgunned.

On the day that Bonnie and Clyde were finally killed during a shoot-out, the following weapons were found in their “Death Car”: three .30-06 BARs, one sawed-off Winchester 10-gauge lever-action shotgun, Bonnie’s beloved shotgun, seven M1911 Colt .45 pistols, one .32-caliber Colt automatic pistol, one .380-caliber Colt automatic pistol, and one double-action Colt revolver.

They also had 3,000 rounds of various ammunition and 100 BAR magazines with 20 cartridges in each.

No one can say they weren’t prepared to uphold their notorious reputations…

Remington’s Current Predicament

As I stated earlier, Remington said it would file for bankruptcy protection, succumbing to a slump in business worsened by, of all things, a president who steadfastly supports Americans’ right to bear arms.

The bankruptcy is a blow to the private-equity mogul Stephen Feinberg who has been a prominent supporter of Trump.

Feinberg’s firm, Cerberus Capital Management, acquired Remington over a decade ago and subsequently burdened it with nearly $1 billion in debt.

The Chapter 11 bankruptcy will let Remington stay in business while it works out a plan to turn around the company and pay its creditors.

CNN indicated that Cerberus will give up that ownership once the restructuring is complete.

And while the historic Remington name is unlikely to disappear anytime soon, the company’s travails highlight the shifting fortunes of the firearms industry and its fraught position in the nation’s economic and political life.

The industry’s fortunes took a massive hit after Trump’s election because Clinton’s defeat erased fears among gun enthusiasts about losing their access to firearms.

Sales plummeted, and retailers stopped reordering because they found themselves filled to the brim with mountains of unsold inventory.

“It’s not the first time Remington has been in financial trouble; it probably won’t be the last,” said Richard Feldman, president of the Independent Firearm Owners Association. “Almost all behemoths end up stumbling over themselves during see-saws in industry cycles. I suspect that if the Democrats make a resurgence this November, gun company stocks will come roaring back with them.”

Remington’s prepackaged reorganization will be filed with the U.S. Bankruptcy Court in Delaware, according to a statement released by the company.

Holders of the gunmaker’s $550 million term loan will take an 82.5% equity stake in Remington. Third-lien noteholders will get 17.5% of the company, and four-year warrants will get a 15% stake — according to Remington.

Creditors will also provide a $100 million debtor-in-possession loan to finance operations throughout the bankruptcy.

Remington isn’t the industry’s first to file for protection during reorganization.

It’s America’s oldest gunmaker, and that legacy didn’t escape the attention of Remington Executive Chairman Jim Geisler:

Since its founding over 200 years ago, Remington has been a uniquely American company and brand. Our longevity is owed to generations of loyal customers and hard-working employees who met challenges and delivered results. Difficult industry conditions make today’s agreement prudent. I am confident this regrouping ensures that Remington will continue as both a strong company and an indelible part of our national heritage.

And the company said in a news release:

Remington’s business operations will continue to operate in the normal course and will not be disrupted by the restructuring process. Payments to trade partners, employee wages and other benefits, support for customers, and an ongoing high level of service to consumers will continue without interruption.

The Bottom Line

Even though Remington is a privately held company, shares of publicly traded gunmakers also fell on Monday — even while the overall market gained.

Sturm, Ruger & Company (NYSE: RGR) fell 2.5%, and American Outdoor Brands Corporation (NASDAQ: AOBC) lost 1.3%.

That’s all for now.

Until next time,

John Peterson
Pro Trader Today