Underwriters have never been in the forefront of economic change, so it was only to be expected that Newton C. Kindlund would have a hard time finding one to handle the initial public offering of his company, Holiday RV Superstores Inc. After all, no recreational vehicle dealership had ever gone public before. But after three and a half years of beating the institutional bushes, he finally located an underwriter in Rochester, N.Y., who was receptive to the idea, and Kindlund thought he was home free.
Then, eight days before the issue date, the stock market crashed. Kindlund proceeded with the offering anyway, and a good thing he did: the 2-million-share IPO was oversubscribed by 30%, as Holiday RV Superstores raised $4.5 million for expansion. By year's end, the stock price had risen 42%, making it the 11th best-performing IPO of 1987. (Holiday RV tied with Clean Harbors Inc., which also went public after the crash.)
Kindlund credits the offering's success to customer loyalty, citing the underwriter's estimate that 10% of the issue was sold to Holiday RV customers. It's not surprising that the underwriter, Thomas James Associates, prefers to chalk it up to the firm's customer base of small investors interested in long-term growth. Firm president Brian S. Thomas also notes that the crash did hurt the offering: before October 19, it was oversubscribed to the tune of 150%.
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