“Saggin” was the term created to describe the popular pant style of letting your pants hang low showing your boxers. It started as a “hood” style and expanded from there.

His hammer is referring to his gun which he keeps inside his pants. The bagginess helps to conceal the weapon.
This is also a reference to MC Hammer and the infamous hammer pants

There could also be a possible reference to the Slaughterhouse song Hammer Dance the hook in this song is
“I’m in the club, bottle in my hand doing my two step
While I got my gun in my pants, call it the hammer dance
Bitches dancing on a nigga, when they feel the gun
I tell ‘em we’re doing the hammer dance
Two steppin’ with my weapon on me
You good? I’m just checking, homie
Fam-a-lam, you don’t stand a chance
While I got this gun in my pants doing my hammer dance”
Horseshoe Gang is apart of Crooked I’s movement the Circle of Bosses