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I had extended conversations recently with a chap on a vacation trip. He owns a successful small firm that does business with a Marmon subsidiary, Cerro Fabricated Products.

The business? Forged and machined components for the AR-15 rifle platform. The chap claimed that Cerro has been the most prolific manufacturer of such parts in the USA. He said: “you own Berkshire – you own the biggest maker of AR-15 parts in the country”.

Cerro used to have a picture of Warren in the lobby but took it down at some point. Possibly did not want to advertise their association with a known liberal?

https://cerrofabricated.com/

Parts We Forge
- Military and Law Enforcement Firearms Components

Not only military and law enforcement firearms, I think...

https://www.statista.com/statistics/1388010/share-...
Today, it is estimated that there are over 20 million AR-15 rifles in the U.S., most of which have been made domestically in the past two decades.

How do we all feel about this (if true)?

Personally, I am not a fan of the AR-15.
Yes, they are fun to shoot.
Clearly, they add to the growing gun violence problem in the USA, Mexico and elsewhere.

Mr Buffett once commented that with (now) 392,000 employees, it's pretty much a certainty that at least a few of them are behaving badly at any given time, despite management's best efforts.

In the same vein, since Berskhire owns hundreds of companies with thousands of operating units, it's a near certainty that some of them will be in business lines that aren't very palatable in the eyes of an investor. (perhaps justifiably, perhaps not, probably some of each). I definitely don't love the idea, to say the least, but as the saying goes, everybody is complicit in something. All you can do is minimize it.

Ironically, the wealthier you are the more unavoidable such things are. Anybody owning an index fund is complicit in a LOT of things. Probably more, on a percentage basis, than an owner of Berkshire alone.

So *why* do we own this?
Looking at it purely as a financial decision, it's a slam dunk that Berkshire would have been invested in tobacco firms these last few decades, but they haven't been, presumably because management didn't feel comfortable with it. I rather doubt Mr Buffett would have bought a gun parts maker as such, but it's a small part of a bigger division (Marmon) and I presume the decision in this case is left to division management. I've been in the exact situation myself: owning a company that wouldn't do business with a certain class of firm, but delegated some decisions to someone who took the initiative in the other direction. We lived with it, and it wasn't illegal.

Jim

"Today, it is estimated that there are over 20 million AR-15 rifles in the U.S., most of which have been made domestically in the past two decades."

How do we all feel about this (if true)?

I doubt it is true. The correct number is probably 4 or 5 times that.


Personally, I am not a fan of the AR-15.
Ok. Don't buy one. Simple.


Yes, they are fun to shoot.

I find that an SKS is more fun to shoot than an AR-15. AK-47 is equally as fun. All three are magnificent examples of engineering.


Clearly, they add to the growing gun violence problem in the USA, Mexico and elsewhere.

Clearly? Criminals would not do crimes if one particular rifle was not in existence?
Mexican cartels would be back to bow & arrows?
Good to know.

I wonder what Mexican cartels and the Mafia used before Eugene Stoner invented the AR-15 in 1957.


Residents of England don't have AR-15s. How is there crime problem doing? Oh, that's right, they don't have a gun problem, they have a knife problem.


Actual gun crime statistics are that almost all gun-related crimes are done with a pistol not a rifle.

Looks like I wasn't very clear.

How do we all feel about Berkshire owning a company that is the biggest maker of AR-15 parts in the country?

Residents of England don't have AR-15s. How is there crime problem doing? Oh, that's right, they don't have a gun problem, they have a knife problem.

https://www.statista.com/statistics/1374211/g7-cou...
2021 (last figure shown for UK)
Homicide per 100k people:
USA 6.78
UK 1.15

https://en.wikipedia.org/wiki/List_of_countries_by...
USA 5.763 (#6)
UK 1.148 (#53)

The USA is an extreme outlier among industrialized countries.

Actual gun crime statistics are that almost all gun-related crimes are done with a pistol not a rifle.

I agree.
I still don't want to own the largest AR-15 parts maker in the country. It's not even a rounding error for Berkshire.

It’s so interesting that those who lecture the board about political posts are often *the very first* to engage in political logorrhea in their replies to questions. My nose detects a hint of hypocrisy.

Actual gun crime statistics are that almost all gun-related crimes are done with a pistol not a rifle.

Does every post have to be about politics? Maybe take some advice from this guy:


https://www.shrewdm.com/MB?pid=23102737

How do we all feel about Berkshire owning a company that is the biggest maker of AR-15 parts in the country?
How do we all feel about Berkshire owning a company that is the biggest maker of AR-15 parts in the country?

Eh.
Is it a legal product?

Is it an immoral product?

Does the product directly cause harm? Tobacco does, althought the harm is something a person does to themself, using their own value judgement. Their body, their choice.

How much purity do we demand of a company? If we disagree with one little thing, is the company to be banished to the depths of hell?

Does it even matter what we feel about Berkshire owning Cerro?
However we feel about it makes no difference. Warren Buffet doesn't know or care what a handful of people on an internet message board feels.
If it is not acceptable to you, don't own BRK stock.

Lots of people won't own tobacco company stocks.
FWIW, MO has higher CAGR than SPY. Jim Kramer said that if you hate tobacco companies, buy MO and take the excess profits to fund anti-tobacco groups.

Depending on whether it was chosen as an independent acquisition or came bundled with a larger company, it might matter.
During the early 1980's, during a trip to France, I noticed a newfangled type of parking meter. You only needed one per block; you put money in and it spit out a paper ticket, with an expiration time, which you put on your dashboard. The manufacture’s name, Schlumberger was cast into the enclosure.

What a cool idea! So, I called up my stock broker (yup, you actually placed orders over the phone back then) and told John Locke (his real name) that I wanted to buy 100 shares of a French company named Schlumberger (which I pronounced as if it rhymed with hamburger) whose parking meters were going to take over the world. He advised me to forget the idea as he was the kind of guy who wanted to keep an eye on the companies he owned (meaning all US). But I was not to be put off.

When the company's annual report showed up, it had an oil rig on the cover. I leafed through it, page by page - and no sign of parking meters. It turns out that it was a pimple on an instrument company which the company had acquired.

While I happened to make money on the stock, it was by dumb luck - and the experience taught me the importance of doing due diligence before purchasing anything.

Jeff

I love the AR platform. Doesn't bother me that Berkshire is in the business.

I love the AR platform. Doesn't bother me that Berkshire is in the business.

Sure.

I don't love the AR platform, and finding out that Berkshire, by far my largest and longest-held stock holding, has a sub that is the largest manufacturer of AR parts, well it was quite jarring.

I can't imagine that Buffett is a fan of the AR platform in civilian hands. If he is, I have very badly misjudged him.

Note that Cerro claims to make "Military and Law Enforcement Firearms Components". I'm fine with that.
They don't say they make firearms components for civilian use. My source says otherwise.

I still don't want to own the largest AR-15 parts maker in the country. It's not even a rounding error for Berkshire.

And Sammy doesn't want to own the company that makes precision casting for nuclear facilities, including weapons facilities.

And Andy doesn't want to own the company that makes important parts for oil and gas exploration.

And Nancy doesn't want to own the company that makes nitrogen rich fertilizers.

And Davis doesn't want to own the company that makes mobile homes and leases them to people desperate for housing.

And Trish doesn't want to own companies that provide insurance because they often profit on people's misery.

And Sue doesn't want to own railroads because they are massive polluters until they all go electric.

Etc.

So, I looked up their web site:

https://cerrofabricated.com/markets/defense/

I'm going to take a stab that a small slice of their alloy casting business is devoted to AR-15 items. While I didn't dig far into the matter, the castings are probably OEM items utilized by one or more company which uses them as part of the assembly of assault rifles.

Long story, but back in the early 2000's I ended up with two manual Bridgeport vertical milling machines - old, but in perfect condition. I decided to convert one to a CNC tool (as a hobby project) and sold the other one on E-Bay to finance the project. It was bought by Armalite (the manufacture of the M16). I was curious and asked why they had bought what amounted to an antique tool (I think it dated to the early 1960's). They said that they used them to create a thread for the flash suppressor. While Bridgeport was already out of business, even their "legacy" tools were vasty superior to contemporary Chinese "clones".

So, the question is whether that sale makes me complicit in whatever those rifles were used for?

Jeff

I can't imagine that Buffett is a fan of the AR platform in civilian hands.

From google:
AI Overview
The most popular rifle in America is the AR-15 style rifle. It's widely favored for its versatility, modular design, and user-friendly nature. One in five firearms purchased in the US is an AR-style rifle, according to a NSSF estimate.

The AR-15 is not the select-fire rifle (capable of fully automatic) M16.

unfortunately its the government, not ESG, that frowns on my ownership in private enterprises making the highest profits in illegal activity.
one can see this in the rush to crypto as it becomes normalized but still growing as the largest avenue for cybercrime and sanctions avoidance.

so much for economic freedom.

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