Walton Fortune Too Big To Buckle

Thanks to the Waltons, the aggregate wealth of the state’s richest families increased during the past year.

Outside of the Wal-Mart fortune, however, times were tough for Arkansas’ wealthiest of the wealthy.

Bankers, poultry processors and auto dealers all saw the value of their holdings drop. Among those whose wealth shrank over the past 12 months were some of Arkansas’ best known business families, including the Tysons and Dillards.

Even the Stephens family of Little Rock, whose total wealth reached $3.8 billion this year, gained only through the phenomenal run-up in the value of stock in Power-One Inc.

The Waltons — their wealth tied to the success of Bentonville retail giant Wal-Mart Stores Inc. — stayed atop Arkansas Business’ sixth annual listing of the wealthiest Arkansans. That’s despite the fact several family members, including matriarch Helen Walton, spend much of their time in Arkansas but are no longer official residents of the Natural State.

The family’s estimated wealth of almost $108 billion makes them the richest not only in Arkansas, but in the world as well. The lion’s share of the family’s riches lies with Wal-Mart, the discount store chain founded by the late Sam Walton. The value of the Walton family’s Wal-Mart stock increased 41 percent from last year’s estimate of $77 billion.

The only other company to come close to having such a dramatic impact on the fortunes of the state’s well-to-do is Power-One, the California power supply company taken public by Stephens Inc. in 1997. In the past year, the company’s stock has jumped from less than $10 a share to $115.88 on July 7, the date on which the value of public holdings were based.

The Stephens family investment in Power-One has swelled to $717 million this year from $67 million a year ago. Other wealthy Arkansans have benefited from Power-One as well, including Stephens executives Curt Bradbury and Jon E.M. Jacoby.

And the story doesn’t end with the July 7 close. Since then, Power-One’s stock has continued its climb, reaching $149.25 a share on July 19. That brought the value of the Stephens family holdings to more than $923 million.

But not all of the state’s monied citizenry shared in such pecuniary success. In fact, many incurred huge drops in wealth — although all are certainly still in the upper tax bracket.

The William Dillard family of Little Rock fell from No. 11 to No. 43 on the list as the value of their Dillard’s Inc. stock plummeted to $83 million from $209 million a year ago. Dillard’s, one of the nation’s largest department store chains, has continued to disappoint Wall Street with its slumping sales and troubles integrating its 1998 acquisition of Mercantile Stores Co.

The family compounds the problem by remaining tight-lipped with the press and industry analysts. The family wealth — which also includes Acxiom Corp. stock and ownership in CDI Contractors — is now estimated at $99 million, down from $265 million a year ago.

The Don Tyson family of Springdale has seen its wealth cut in half over the past year. Like the Dillards, the Tysons’ fortune rises and falls with the performance of the family-run publicly traded company, and poultry processor Tyson Foods Inc. continues to struggle with a poultry glut that has depressed prices worldwide.

Still, the family’s wealth came in at $1.04 billion, off from $2.5 billion a year ago, making them one of only four Arkansas families with more than $1 billion in total holdings.

Excluding the Walton’s growing fortune, the total wealth of the 108 other families on the list shrank by 7 percent to $18.2 billion, the first such decline in the list’s history. The number of people who made the $30 million cut-off also declined, falling to 109 from 113 last year. Including the Walton’s wealth, the holdings of Arkansas’ richest increased 31 percent to nearly $126 billion.

There are nine newcomers to the list this year: Dr. J. Floyd Kyser, a retired Little Rock physician, with wealth estimated at $150 million; the Sonja Hubbard family of Texarkana, with $135 million; the John L. Anthony family of El Dorado, with $70 million; the Douglas Parker Sr. family, $54 million; Chris Whitt of Fort Smith, $50 million; Curt Bradbury of Little Rock, $38 million; Dick Hill and Tim Hill of Russellville, $35 million; H. Lee Scott Jr. of Rogers, $32 million; and Thomas M. Coughlin of Bentonville, $32 million.

A total of 12 Arkansas families dropped off the list this year after their estimated wealth fell below the $30 million mark. Some had dramatic reversals of fortune, such as the J.R. Rose family of Rogers, whose equity in the Rose Care nursing home chain dipped to $19 million from $56 million only a year ago; and the Jerry Brewer family of Fayetteville, whose wealth shrank to $6.6 million from $40 million after the breakup of StaffMark Inc. Other former listees who didn’t make the cut this year include the George Gleason, family Barnett Grace, Gerald Johnston and Les Baledge.

Bank values — both for publicly traded and privately held institutions — are another reason many wealthy Arkansans saw their fortunes slide during the past 12 months. Most banks lost value with the cooling of merger mania and concerns over rising interest rates.

Stock prices are down for most publicly traded banks with Arkansas connections, including Bank of America, Firstar Corp., Regions Financial Corp. and Simmons First National Corp.

The price banks can demand in the current acquisition market also is off significantly from recent years. For example, First United Bancshares Inc. agreed earlier this year to sell to BancorpSouth of Tupelo, Miss., for $455.7 million in stock, which is 1.86 times book value. That’s far less than the 4 times book value First Commercial Corp. fetched in its 1998 deal with Regions, or even the 3.5 times book First United officials spurned when courted a few years ago by First Commercial.

Indeed, the median multiple provided by Business Valuation Services in Dallas for use on the Wealthiest Arkansans list was 1.5 times book for bank holdings companies, compared to 2.1 last year.

For Arkansas bankers on the list, that has meant their investments aren’t worth nearly what they were a year ago. For instance, Herbert McAdams of Little Rock saw his estimated Bank of America Corp. holdings drop to $343 million from $524 million. And Reynie Rutledge of Searcy saw the value of his equity in First Security Bancorp. slip to $117 million from $154 million.

The wealth is distributed rather unequally throughout the state, with more than half of the richest families living in three counties in central and Northwest Arkansas.

Of the 109 individuals and families on the list, 36 live in Pulaski County and 20 are in Washington and Benton counties. Fort Smith landed 13 families on the list, and Jonesboro added five. Conway and Searcy have three each, as does El Dorado — including the many branches of the Murphy family tree. But Pine Bluff and Hot Springs are each home to only one of the state’s wealthiest.

Other poultry processors fared no better than Tyson. The Collier Wenderoth Jr. family of Fort Smith got a double whammy. The family’s investments in OK Industries Inc., a poultry processing company, and First Bank Corp., dropped to $207 million from $307 million last year.

Others — like Mark Simmons of Siloam Springs, owner of Simmons Foods, Gene George of Springdale, owner of George’s Inc., and Lloyd E. Peterson of Decatur, owner of Peterson Industries — also saw their wealth ebb.

Valuation of auto dealerships was sliced in half during the year, according to Business Valuation Services. That meant declining wealth for families with heavy investments in that industry. For example, Harold Gwatney, owner of Harold Gwatney Chevrolet in Jacksonville, saw his riches drop off to $38 million from $77 million last year.

Looking strictly at major public company stock holdings valued at $1 million or more, Arkansans didn’t fare too well there, either. Of the 89 families and individuals on the list, 55 saw a decline in their portfolios. Of course, many bank stock holdings suffered, with investors in Regions, Firstar, Bank of American and Simmons losing anywhere from 18 to 50 percent of their wealth.

Tyson stock in particular dragged down the investments of many Arkansans. Besides, the Tyson family, the James T. “Red” Hudson family, Leland Tollett, Gerald Johnston, Charles Jurgensmeyer, Donald Wray, Neel Cassady, Joe F. Starr, Wayne Britt and Greg Lee all saw their holdings nosedive 50 to 60 percent.

Many of the state’s trucking companies wrecked local investment portfolios. The Sheridan Garrision family of Harrison saw its American Freightways stock slide 28 percent. The USA Truck investments of Robert Powell, James Speed and Jerry D. Orler, all of Fort Smith, were off about 28 percent. And Dean and Rose Marie Cannon of Springdale’s stock in their trucking company, Cannon Express Inc., fell 23 percent.

David Banks, chairman and CEO of Fort Smith-based Beverly Enterprises Inc., saw a 48 percent drop in the value of his Beverly stock, although he offset that loss with his Wal-Mart investment;

Marvin Griffin of Rogers, chairman of Brass Eagle, lost 72 percent of the value of his investment in the company; and

Gerald Johnston, whose Tyson holdings fell 60 percent, also lost nearly 50 percent of his investment in Fairfield Communities.