By K5PO, on the scene
FAYETTEVILLE, Ark. — News of a recent tech stock IPO brings back fresh memories of an IPO a little closer to home. In the fall of 2010, the Noise Blankers Radio Group became what was assumed to be the first amateur radio club to launch an Initial Public Offering for stock, commonly referred to as an IPO.
The discussion started when Nathan Shinn K5KAC read in the ARRL Club Affiliation documentation that some clubs actually go through an incorporation process to protect club assets. “If these guys are incorporating, why don’t we go to the next level and issue an IPO on the club?” suggested Shinn. Kevin Thornton K5KVN, Gary Darnell WB0RUR, and Andy Holmes K5PO were present for the initial discussion.
“I was in favor of the initiative at the time, thinking it had something to do with Increasing Power Output (IPO) on my amplifier. I had no idea it had something to do with stocks and bonds and whatnot,” recalls Holmes.
Thornton had a very good idea of what IPO meant. “We had to pay for the website hosting renewal for this ham humor site we maintain called hamhijinks.com and since we had no money, I figured this IPO thing was worth a shot. Maybe we could sell one or two shares to friends and family,” said Thornton.
Darnell called an investment broker to get some details on how the IPO process worked. “He was ecstatic!” said Darnell remembering his friend Donnie Bartlett’s tone. “Bartlett said it was a sure thing we’d get listed on the NYSE and thought it was a great idea. I told him we were hoping to maybe raise $1000.”
“I didn’t know it at the time, but he was more right than any of us could have expected,” said Darnell.
The IPO was scheduled for November of 2010. With some 400,000 shares being issued for the IPO alone, the offering had great potential, except in the profit department.
“It really got carried away from us,” recalls Shinn. “Somehow, an investment analyst group mixed up our ticker name of NBRG with some military equipment manufacturer (Northrop Grumman Corporation) and the interest exploded. You see, we don’t make, sell, or service anything. We never had a business plan and, for that matter, never had a business.”
Club President Darnell said it just kept going. “Later, some news report confused us with a noise cancelling headphone company—the kind that sells the pricy headphones that are so popular these days. This just added fuel to the fire!” said Darnell.
“We even went on TV and tried to explain it all. But the train had left the station with a head full of steam,” said Holmes.
“We don’t see profit as a part of our future and will make no effort to change that trajectory. You really don’t want to buy this stock,” Holmes told CNBC reporter Jill Etwerst.
It didn’t work. Analysts called Holmes’ statements “bold” and “unapologetically honest.” Morgan Stanley subsequently expected the IPO to open at $25.
The IPO was an astounding success, reaching a per-share high of $82.43 in the following weeks. The Noise Blankers became overnight millionaires. (Except for club members Steve Gibbs K5OY and Fred Boerner WD5DKA, who both missed the meeting where the IPO idea came up, although they both recall having heard while listening to shortwave that some fancy headphone IPO was coming.)
The success didn’t last forever, though, as the club literally never made any profits whatsoever. Thornton, the Treasurer, made what would be the first and last earning report to investors a couple months after the IPO. “As Vice President Andrew Holmes noted before the IPO, we do not have any plans to make any profit. We operate in ham radio contests and talk about Beofengs.”
The day that followed the earnings announcement saw one of the most violent drops in stock history, taking the stock from its open of $56.42 down to $0.73 in seven seconds. The stock was delisted from markets that afternoon.
“We never made or lost a dime in the whole deal,” says a wistful Shinn. “We were too afraid to take any money out, knowing it was bound to come back to bite us.”
“I heard the only one that actually profited on the deal was my old friend Donnie Bartlett,” said Darnell.
“They say he made $24 million in the whole process, but I can’t confirm it as he hasn’t returned my phone calls in years,” said Darnell, talking on the same cell phone he had in those exciting pre-IPO days.