The two most widely followed gun makers are Sturm Ruger (RGR) and American Outdoor Brands (AOBC), which was formerly Smith & Wesson. Through much of President Obama’s two terms, these stocks went gang-busters. Anytime there was talk about limiting or outlawing gun ownership, a certain percentage of Americans would rush out and buy more of them. Investors realized this as well, and the stocks were bid higher.
Leading up to the 2016 Presidential Election, both RGR and AOBC were rallying because the stock market was giving Clinton a much higher chance of victory than Trump. When Trump shocked the world and won on November 8th, the gun-makers tanked the following day. With the GOP guaranteed to hold the White House for the next four years, investors quickly realized there would be no Second Amendment threats for the foreseeable future. You can see the sharp drops following the 2016 Election in the charts of RGR and AOBC below.
In the first few months following last year’s Election, RGR and AOBC continued to trend lower. At their lows in early March, RGR was down 25%, and AOBC was down 35%.
We’re highlighting the two names today because recently they’ve been on a tear. AOBC has rallied 30% off its lows, while RGR has rallied 38% and just this week moved above where it was trading prior to the Election.
Over the last few weeks there have been a lot of data points highlighting the “Trump fade,” where asset classes that moved sharply higher immediately following the Election have given it all back. In the case of the gun-makers, it’s the same story only in the opposite direction.