Obviously I missed something. Are they teetering on the brink?
While many gun owners will know the story, the majority will likely not.
As investors know, both Vista Outdoor (VSTO) and American Outdoor Brands Company (AOBC) have over the past few years gone on an acquisitions spree in order to form diversified outdoor and shooting sports companies. As novel as the concept is, this was done more than 10 years ago by Stephen Feinberg, the owner and founder of Cerberus Capital.
In 2007, Cerberus started acquiring companies in the highly fragmented firearms industry in order to create "Big Gun," the first $1 billion in sales firearms company. By acquiring many companies and putting them under one umbrella, the idea was that you can unlock value in a combined sale.
Called "Freedom Group," Cerberus acquired the iconic brands such as Bushmaster, Marlin, DPMS, Remington, H&R, Parker, Dakota Arms and Nesika, and also picked up a number of firearms accessories manufacturers such as Advanced Armament Corp. ("AAC"), Stormlake, TimberSmith, and Barnes Bullets.
The company had also acquired terrific firearms manufacturers like Para Ordinance USA in 2012 only to kill the brands a few short years later!
Pretty good summary of WTF went wrong here: https://seekingalpha.com/article/41...sta-outdoor-ruger-and-american-outdoor-brands
Seeking Alpha said:... the company did not help themselves by hiring financial managers rather than gun people to run the company.
Immediately following their acquisitions, gun owners quickly noted the significant drop in quality in firearms, especially with well-known brands like Bushmaster and Marlin.
All of this occurred after management put a focus on centralizing production, thus, many brands which were well known for their artisan quality and hand fitting quickly lost that personal touch.
The quality became so bad that Bushmaster's original owner started up a new company, Wyndham Armory and rehired the bulk of the employees who were let go by Bushmaster!