Northwest Arkansas’ Wealthiest

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Stock prices change, private company market values vary widely, liquidity can be limited and trying to estimate a person’s wealth – if you can find it – results in a myriad of complexities.

tNonetheless, the Northwest Arkansas Business Journal and Arkansas Business accepted the challenge and compiled rankings of some of the state’s wealthiest people.

tThe fortunes of 87 Arkansas families – based on stock holdings, and ownership in private companies and real estate – are conservatively estimated to be a combined $42.4 billion. Estimates are not definitive because the totals exclude scores of holdings that are not required to be disclosed publicly. The values of private companies were assessed based on information from publicly traded counterparts using research compiled by Business Valuation Services of Dallas (See explanations on Page ??).

tFamiliar Arkansas names certainly appear on the list – the Waltons, the Stephenses, the Tysons, Rockefeller, the Murphys, the Lyons. But research also uncovered lesser-known Arkansans whose holdings in private poultry processing plants, trucking companies, land, banks and other areas have produced dozens of family fortunes that met the list’s minimum of $30 million in net worth.

tFamilies from Washington and Benton Counties accounted for one-fourth of the state’s wealthiest. Their primary sources of wealth are no surprise: Wal-Mart and food processing.

tTwo lists of rankings were compiled: one is based entirely on Arkansans’ known stock holdings in public companies, and the other combines stock holdings, major land holdings and the estimated market value of private companies.

tDriven by a rebound in Wal-Mart Stores Inc. stock and the ongoing surge in bank prices, a portfolio of 135 millionaire stockholders in Arkansas – including 40 from the Northwest region – grew by $5 billion during the past year.

tThe publications compiled the stockholders list using documents filed by public companies and individuals with the Securities and Exchange Commission. The value of their combined holdings at the close of trading May 27 was $34 billion.

tThe Walton family of Bentonville skewed the numbers higher, with a $3.9 billion or 16.6 percent increase in the value of their Wal-Mart stock. Excluding the Waltons, the group of Arkansans still enjoyed a $1.1 billion portfolio gain.

Sam Walton on wealth

tThe late Sam Walton of Bentonville, the founder of Wal-Mart Stores Inc. who was first named the richest man in American back in 1985 by Forbes, showed disdain for these types of lists – as will most of the individuals and families who are listed in the Northwest Arkansas Business Journal rankings. His family’s combined wealth easily leads the state at an estimated $28 billion.

t”Folks we never heard of started calling us and writing us from all over the world and coming here to ask us for money,” Walton wrote in his autobiography. His “it’s only paper” comment after the 1987 stock market crash lowered his holdings by a half billion dollars put the wealth into perspective.

tLikewise, the late Witt Stephens of Little Rock reflected on the concept of wealth in a 1987 interview shortly after the market crash:

t”What is wealth these days?” freelance journalist Steve Barnes asked him.

t”I don’t really know,” Stephens responded. “I really don’t. My brother and I don’t take a lot of money out of this place. We keep a lot of capital around, to make other deals. To stay immune to these – swings.”

tIndeed, the Stephens family – led by Witt’s brother and partner, Jack – has the most diverse holdings among the wealthiest Arkansans and are the most difficult to evaluate. Arkansas Business’ most conservative estimate of the Stephenses’ holdings is $2.6 billion, including public company stock holdings of nearly $1 billion, Donrey Media Group, ownership in at least two dozen other private companies, the investment banking firm Stephens Inc. and vast natural gas holdings. A senior Stephens executive was quoted by Fortune in 1990 as saying that the gas production company alone could be sold for more than $1 billion.

tOther families share the Waltons’ dependence on Wall Street fluctuations to determine the extent of their substantial wealth. Don Tyson, J.B. Hunt, F.S. “Sheridan” Garrison, the Dillards and the Hudsons have the bulk of their money tied up in single companies that they control. Their liquidity is extremely limited, but dividend, salary and stock option income provides plenty of loose change.

Bank sales fuel gains in state

Two bank sales and the potential for another had the most dramatic impact on the 1997 rankings:

~ The acquisition of Boatmen’s Bancshares Inc. by NationsBank Corp. While the stock holdings are based on the last proxy statement published by Worthen Banking Corp. of Little Rock, which was bought by Boatmen’s in 1995, it’s widely considered a safe assumption that those stockholders kept their shares through the NationsBank deal.

~ The sale of Southwest Bancshares Inc. of Jonesboro to First Commercial Corp. of Little Rock.

~ A 36 percent increase in the stock value of First Commercial, whose financial performance and attractiveness as a purchase target impacted nearly one-fifth of the individuals on the stockholders list.

Wealthy get wealthier

In several cases the wealthy simply got wealthier because their investments had a good year.

The Murphy family of El Dorado rose from $573 million in 1996 to $700 million. Sharp increases in the value of Murphy Oil Corp. and First Commercial stock, along with the spinoff of Deltic Timber Corp., boosted the vast family fortune.

Forbes magazine estimates Jerry Jones to be worth $435 million, up from $375 million a year ago. His Dallas Cowboys football franchise alone is the most valuable in professional sports with an estimated value of $320 million.

Herbert McAdams of Little Rock continued to reap the benefits of bank consolidation as his Boatmen’s Bancshares holdings, now NationsBank, jumped 85 percent from $227 million to $418 million in one year.

More about the lists

tThe lists realistically will vary widely each year because of stock price fluctuations. For example, National Home Centers Chairman Dwain Newman of Springdale ranks at No. 47 statewide with stock valued at $9 million, but in 1994 might have been listed as high as No. 18 with a $49 million value when share value was significantly better.

tKnown to be missing from the list are owners of stock who are not required to disclose their holdings, physicians, lawyer s, real estate developers and certainly others who could very well qualify but whose wealth is difficult to estimate. Wal-Mart, in particular, is known to have created dozens of multimillionaire stockholders through the years.

Family ties

Marriage has created some powerful business partnerships in Arkansas.

Jerry Jones and his brother-in-law, John Ed Chambers of Danville, were partners in several ventures. Chambers is ranked No. 49 with $59 million.

A Federal Reserve Board filing by Reynie Rutledge of Searcy (No. 20 with $121 million) lists dozens of ownerships interests across the state – including a number with real estate developer Jim Lindsey of Fayetteville, who’s listed at No. 68 at $36 million, although his widespread real estate deals are likely significantly higher. Lindsey is Rutledge’s brother-in-law.

Private companies selling high

Ray A. Sheeler, a principal with Business Valuation Services of Dallas, says private companies today are attracting more lucrative offers from public companies.

He also says controlling stock ownership for families like the Tysons and Dillards, who own Class B stock with special privileges in their namesake firms, would likely sell at a premium. Arkansas Business valued the Class B shares equal to Class A.