Wealthiest of Northwest Arkansas

Wal-Mart Rally, J.B. Hunt Rebound Lead to Big Gain

Bank merger fever. Soaring Wal-Mart Stores Inc. stock prices. A sharp rise in the values of private companies. These are a few of the reasons the 1998 members of the Northwest Arkansas Business Journal “Wealthiest Arkansans” list enjoyed a $28.5 billion jump in wealth this year.

It’s the state’s toughest team to make: To qualify, a family or individual must have at least $30 million in known assets. This year, 113 entrants made the cut, and their combined wealth is conservatively estimated to be $71 billion.

As always, the field is overshadowed by the wealthiest family in the United States: the Waltons of Bentonville. Their holdings in Wal-Mart stock alone soared nearly 86 percent over last year’s figure, giving the Waltons total holdings of more than $51.5 billion.

The J.B. Hunt family of Fayetteville made a major comeback as the value of J.B. Hunt Transport Services Inc. stock increased 93 percent over the same time a year ago. The Hunts’ holdings of $485 million ranked eighth on the statewide list, up from 11th.

Stock holdings, combined with ownership in private companies and real estate, were used to compile the annual “Wealthiest Arkansans” list. Of course, estimates are not definitive because the totals exclude scores of holdings that do not require public disclosure. 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 20).

As one might imagine, not everyone on the list is happy to have their wealth dissected in such a public fashion. One member of the list called it “tacky,” and another refused to provide any information on his company when he learned he would be ranked by wealth. A few others wanted to make sure the information, if it had to be published, was accurate.

Don Harp of Springdale disputed the estimate of his wealth as too high. “It’s several times wrong,” he says.

Looking for inspiration? You’ll find plenty of it inside this week’s edition of the Business Journal. Many of the “Wealthiest Arkansans” reached the pinnacle with blue-collar hustle and entrepreneurial genius.

Harvard and Floy Harp started a grocery store in 1930 in downtown Springdale with money they saved while working in the citrus fields of California. The $339 million business, which became a chain of successful super markets, was passed on to their son, Don Harp.

Trucking magnate J.B. Hunt dropped out of school in the eighth grade to help support his family, working in timber mills, picking cotton, harvesting grain and auctioning livestock. After World War II, he drove trucks for 12 years before forming a company in 1962 to use rice hulls as poultry litter. The company started hauling rice hulls across Arkansas, and slowly evolved into an interstate trucking giant.

And talk about risk: Some of our Arkansas families have taken huge chances to start the businesses of their dreams. One, in fact, even bet the ranch.

George Gleason II bought controlling interest in Bank of Ozark when he was only 24 years old, literally betting his family’s 989-acre Yell County ranch as collateral for the $3.6 million deal.

Former University of Arkansas football star Jim Lindsey, today a Northwest Arkansas real estate baron, made his first real estate investment in 1966 at the age of 21 with the $75,000 signing bonus he earned from the NFL’s Minnesota Vikings. Three years later, he sold the land for a huge profit to developers of Northwest Arkansas Mall.

Stockholders galore

In addition to the overall “Wealthiest Arkansans” list, the Business Journal compiled its annual 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 June 5 was $59.6 billion, up from $34 billion in 1997. Excluding the Waltons, the group of Arkansans still enjoyed an $8.8 billion portfolio gain, up from a $1.1 billion rise a year ago.

Private companies sell high

Ray A. Sheeler, a principal with Business Valuation Services of Dallas, says private companies continue to receive more lucrative offers from public companies as consolidation reigns.

“The banking sector has been more significantly impacted than most, but merger activity is not restricted to the megadeals,” Sheeler says. “Mergers and acquisitions have occurred throughout the industry, down to regional and local banks.”

Sheeler says business segments with some of the highest gains in multiples during the past year are banks, radio stations, newspapers, nursing homes, fast-food restaurant chains, poultry processors and lumber operations.

Observations, notes

Here are some observations and notes gleaned from the lists:

~ The 75 percent stock price climb of First Commercial Corp. of Little Rock had one of the most dramatic impacts on the lists, with 10 percent of the “Wealthiest Arkansans” affected.

~ Estimates of families with ownership in commercial construction firms were scaled back drastically with new information on what those firms might be worth.

~ The only deletion from last year’s list was the Charles Gray family of Fayetteville, based on new information.

The Business Journal added 26 families or individuals to the 1998 “Wealthiest Arkansans” list for one of two reasons: Either their existing holdings were unverified or undiscovered in previous years, or their holdings grew in value during the course of the past year. Ten of the additions are directly tied to bank ownership. A multiple of three times book value was used for banks in larger markets, and two times book value was calculated for smaller markets.

~ The fortunes of a few families were adjusted based on information from the sale of private companies. One was H.C. “Dude” Crain of Fort Smith, who sold his interest in Crain Industries for an estimated $130 million and ranks 32nd. ~ Last year’s valuation was high at $250 million. The Garrison family of Harrison was a rare casualty in the rankings because of a 21 percent decline in the value of its American Freightways Corp. stock. The Garrisons, with $132 million, dropped from No. 17 to No. 31.

~ Aside from Wal-Mart stockholders and the Hunt family, one of the biggest benefactors of the raging stock market was the Jerry Brewer family of Fayetteville. The Brewers, who made the list for the first time last year with the highly successful initial public offering of StaffMark Inc., enjoyed a 114 percent gain in stock value from $41 million to $87 million.