What Happened?

Shares of american firearm manufacturing company Ruger (NYSE: RGR) jumped 6.3% in the afternoon session after Beretta Holding S.A. disclosed its acquisition of a significant stake in the company, signaling a potential for future collaboration. 

The European firearms maker reported buying 1,250,100 shares of Ruger for about $45.9 million, giving it a 7.735% ownership position. Beretta stated it acquired the shares using its working capital and, while not currently seeking to take control of Ruger, it planned to open talks with management about potential business and strategic partnerships. This news seemed to overshadow developments in Canada, where the government was set to announce details of its compensation program for outlawed assault-style firearms. A gun-control group there also pushed for the inclusion of the SKS rifle in the ban, highlighting ongoing regulatory pressures within the industry.

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What Is The Market Telling Us

Ruger’s shares are not very volatile and have only had 4 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The previous big move we wrote about was 7 days ago when the stock gained 5.4% on the news that Florida's Attorney General confirmed that the open carry of firearms is now legal in the state following a recent court ruling. 

The confirmation from Attorney General James Uthmeier came after the 1st District Court of Appeal struck down the state's longstanding ban on openly carrying firearms as unconstitutional on September 10. Uthmeier has since issued guidance to law enforcement and prosecutors, telling them to stop enforcing the decades-old prohibition. This significant legal development in a large state like Florida is viewed positively by investors, as it could potentially lead to increased demand for firearms, directly benefiting manufacturers such as Ruger.

Ruger is up 23% since the beginning of the year, and at $42.88 per share, has set a new 52-week high. Investors who bought $1,000 worth of Ruger’s shares 5 years ago would now be looking at an investment worth $690.17.

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