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A visitor tests a Smith & Wesson gun model M&P9, 9 millimetre, at the MILIPOL International State Security Exhibition in Paris October 9, 2007.© Regis Duvignau/Reuters

There has been a lot of discussion about the ethics of investing in gun manufacturers after the mass shooting of schoolchildren in Newton, Connecticut, on Friday. I tried to write about my thoughts on the subject on Monday – essentially arguing that the reason I will never touch a gun stock is because of libertarian U.S. gun regulations.

Since then, anonymous blogger The Fly has dumped his underwater position in Smith & Wesson Holding Corp. following what he called a "mini client revolt" on Tuesday morning.

"They don't want to make money in the stock," the blogger said. "I imagine a lot of people are facing a similar dilemma today and will continue to ponder the meaning of being long a gun maker, post Newtown. Truth be told, I am happy to be done with it, even though it resulted in a massive, stinging, loss of more than 20 per cent."

Smith & Wesson shares were down 10.8 per cent on Tuesday in early afternoon trading, bringing the decline to more than 19 per cent over the past three days alone. An analyst at CL King & Associates cut his recommendation on the stock to "neutral" from "buy" and removed his $12 (U.S.) price target.

It will be interesting to see what institutional investors do now as they either recoil from the ethical considerations of owning a gun manufacturer during this emotional time or bet that stricter gun regulations are coming as a backlash builds. Vanguard Group., Renaissance Technologies Corp. and Acadian Asset Management are now the largest shareholders in Smith & Wesson, adding to their positions in the third quarter. Fourth-quarter changes won't be made publicly available until well after the year ends.

Already Cerberus Capital Management, a private-equity firm, said it will try to sell its stake in gun-maker Freedom Group Inc. – whose Bushmaser brand apparently manufactured the weapon used in the mass shooting – after the California State Teachers' Retirement System said it was reviewing the $500-million it has committed to Cerberus.

However, Cerberus didn't sound as though its own position on gun makers had shifted: "We do not believe that Freedom Group or any single company or individual can prevent senseless violence or the illegal use or procurement of firearms and ammunition," it said.

Ethical investing considerations were also raised among Canadian students looking for guidance on what universities to attend, though the timing of their concerns might not have been dictated by what happened in Newtown.

Three recent university grads launched a petition last week – and the press release went out on Tuesday (coincidence?) – asking Maclean's magazine to start ranking universities on their endowments' approach to ethical investing.

"I went to University for Environmental Studies, so I was shocked when I realized how much money Canadian universities were investing in some of the worst fossil fuel companies on the planet," said one of the grads, in the release. "Then we did a little more research for our petition and realized that universities are invested in just about every other objectionable industry."

In this case, they have their work cut out for them if the ranking is supposed to shame endowments into doing better things with their money: Even the Jantzi Social Index, comprised of the 60 Canadian stocks deemed socially responsible, has tapped oil producer Suncor Energy Inc., coal producer Teck Resources Ltd., along with some pipelines and gold miners, as good enough for the cause.

But if the grads are trying to get university endowments to stay away from gun makers, they'll probably succeed.