Market Volatility Shows on Annual Stockholders List

by Gwen Moritz and Jan Cottingham  on Monday, Sep. 5, 2011 12:00 am  

Arkansas Business' annual list of the state's top stockholders, ranked by the value of publicly disclosed shares in publicly traded companies, is always a snapshot in time. But this year, the snapshot was taken when its subject wasn't ready for its close-up.

(Click here for a PDF list of the top stockholders. A spreadsheet version is available for purchase here.)

The cutoff date was originally planned for Friday, Aug. 19, which turned out to be one of the worst trading days so far in 2011. The Dow Jones Industrial Average, in fact, closed at 10,817.65 that afternoon, the third-lowest close of the year and the capper to a week that saw the DJIA down by 4 percent.

So, just to put the best face on our annual list, we delayed the cutoff as long as we could - to Tuesday, Aug. 23, by which time the Dow had rebounded a bit over 3 percent. Still not pretty, but better.

In the week after the snapshot on Pages 15-17 was taken, the Dow recovered another 4 percent before closing down again on Thursday.  

The top spot on the list is never in question: The family of Wal-Mart founder Sam Walton can be expected to hold that spot into perpetuity. On Aug. 23, the family's publicly disclosed holdings in Wal-Mart Stores Inc. of Bentonville, First Solar Inc. of Tempe, Ariz., and Hyatt Hotels Corp. of Chicago had total value of $98.5 billion. The vast majority of that value - $94 billion on Aug. 23, up from $87 billion a year ago -  comes from the family's shares in Wal-Mart.

Here's a statistic that underscores just how incredibly wealthy the Walton family is: Its holdings in First Solar - mainly by Christy Walton, the widow of Sam Walton's son John - were worth almost $4 billion, which is more than the combined stock fortunes of the next 15 stock fortunes on our list, including the holdings of the Tyson, Murphy, Hunt and Dillard families.

The survivors of Don Tyson, the patriarch of Tyson Foods Inc. who died in January, can claim the only other Arkansas-related stock holdings valued in excess of $1 billion as of Aug. 23. The Tyson holdings in Tyson Foods were worth $1.28 billion, up $42 million from this time last year.

Five more fortunes on the list are measured in nine figures: those of the Charles Murphy, J.B. Hunt and William Dillard families; E. Wayne Garrison, who was chairman of the board of J.B. Hunt Transport Service Inc. until the end of 2010; and Bank of the Ozarks Chairman and CEO George G. Gleason and his wife, Linda.

The biggest leap in stock value during the past year was that of the Dillard family, which doubled from $150 million in August 2010 to $301 million as of Aug. 23. And consider: Dillard's stock, the source of most of the Dillard family wealth, closed at $42.95 on the snapshot date after briefly exceeding $60 a share just a month earlier. At that price, the Dillards were worth $120 million more - on paper, of course.

The List
The U.S. Securities & Exchange Commission requires public disclosure by officers, directors and any person or entity that owns at least 5 percent of the outstanding shares of any publicly traded company. The information included in Arkansas Business' annual list is gleaned from corporate proxy statements and Forms 3, 4 and 5 filed with the SEC. Unless otherwise noted, the shares are owned outright by the person or family listed; exercisable options and restricted shares are generally not included.

In the case of Bank of the Ozarks stock, stock disclosures that were filed with the SEC before the Little Rock bank holding company's stock split 2-for-1 on Aug. 16 were presumed to be doubled.

The stockholders on the list can be presumed to have other investments, even in publicly traded companies, that aren't made public and therefore aren't included in the totals.

The list, as is traditional, includes only total holdings worth at least $1 million on the cutoff date, and the August market slump helps explain why the list is shorter (93 individuals and families) this year than a year ago (112). There were at least five stockholders whose holdings would have exceeded $1 million in value just a few weeks earlier.

The $4.2 billion sale in January of Baldor Electric Co. of Fort Smith to ABB Ltd. of Switzerland also deprived the list of five names. Their ownership in the new company, if any, is no longer a matter of public record.

Bank Stocks
Volatility has been the name of the game with stocks in all sectors, but some companies have weathered 2011 much better than others.

Dillard's Inc., as noted, is still at a historically healthy level after seeing stratospheric growth since January, when it announced that it would spin its real estate holdings into a real estate investment trust. While nothing more has happened on that front, quarter after quarter of solid earnings and five straight months of improved same-store sales have buoyed a stock that languished throughout the 2000s.

As of Aug. 23, the Little Rock retailer's stock price was still up almost 12 percent on the year.

Wal-Mart, too, has held its own despite disappointing domestic sales. Its Aug. 23 closing price of $55.21 was almost 2 percent above its opening price on Jan. 3.

Bank stocks, however, have been lucky to come out alive in 2011. Simmons First National Corp. has taken a beating, down 22 percent from the Jan. 3 open to the close on Aug. 23, and even new ownership and an aggressive recapitalization have been unable to help First Federal Bancshares of Arkansas, the holding company for First Federal Bank of Harrison.

Bank of the Ozarks, which enthusiastically announced a stock split in July, when its price was up more than 20 percent for the year, was back almost to its adjusted starting point by the third week of August.

Trucking Troubles
Arkansas' four publicly traded trucking companies all trade on the Nasdaq, and, like that exchange, their shares were holding their own or peeking in May and July only to dip sharply in early August, as the debt ceiling debate rattled the markets.

Shares of J.B. Hunt Transport Services of Lowell started the year at $41.64, closed at a high of $49.10 on July 7, but by Aug. 23 had slid to $38.80.

Arkansas Best Corp. of Fort Smith started the year at $27.93, but by Aug. 23 had fallen 32 percent to close at $18.96.

P.A.M. Transportation Services Inc. of Tontitown - which has not a single Arkansas stockholder on the largest stockholders list - saw its stocks tread water, down 10 percent from $11.56 at the start of the year to $10.40 on Aug. 23.

USA Truck Inc. of Van Buren has experienced the biggest percentage stock price declines among trucking companies this year, its shares dropping 42 percent from $13.34 to $7.70.

The transportation sector, a leading indicator of economic health or weakness, has reflected the still-shaky economy. However, some trucking concerns, such as J.B. Hunt, have made the best of a difficult market, whatever their share price.

In July, J.B. Hunt reported that second-quarter profit rose 26 percent to $65.7 million, or 53 cents per share, a noticeable improvement from second-quarter 2010 net earnings of $52.1 million, or 40 cents per share.

J.B. Hunt's second-quarter operating revenue rose 22 percent to $1.15 billion. The company said each of its four segments saw revenue growth: Intermodal by 29 percent, Integrated Capacity Solutions by 27 percent, Dedicated Contract Services by 16 percent and Truck by 4 percent.

John N. Roberts, the company's president and CEO, said that second-quarter 2011 "yielded record revenues and record earnings."

In a mid-July report, Wolfe Trahan of New York, research analysts that focus on the transportation sector, noted that J.B. Hunt had posted its second strongest revenue growth in 15 years and said the company "remains our top transport stock pick ... ."

Wolfe Trahan also follows Arkansas Best, which in August announced second-quarter 2011 net income of $5.3 million, or 20 cents per share, compared with a net loss of $7.4 million, or 30 cents per share, in the second quarter of 2010. The company credited its return to profitability to healthy tonnage levels and improved pricing.

An Aug. 3 Wolfe Trahan report, while noting these improvements, said that "we expect it will continue to struggle with the right mix of pricing versus volumes going forward."

Other Companies
Shares of Tyson Foods Inc. of Springdale, which trades on the NYSE, were just pennies higher Aug. 23 ($16.87) compared with Jan. 3, the first trading day of 2011 ($16.42). Tyson, one of the world's largest processors and sellers of chicken, beef and pork, is particularly sensitive to commodity prices because of its huge demand for corn and soybeans.

It saw its share prices pushing $20 in early May only to bounce up and down since. In late June and early July, it had regained momentum, again trading over $19, only to fall prey to the market malaise of late summer.

Tyson last month reported that its third-quarter profit fell 21 percent because of higher grain costs and declining demand for chicken.

"The situation our industry is in today is unsustainable," Tyson CEO Donnie Smith said during a conference call with investors Aug. 8. Smith went on to forecast better results for next year, predicting protein supply would slip as unprofitable companies cut their supplies.

America's Car-Mart Inc. of Bentonville has seen its share price rise from its $27.38 close on Jan. 3 to $30.02 on Aug. 23. Its shares rose to trade in the $37 range in late July but slipped just as those of other Arkansas companies did.

In noting that Car-Mart stock had pulled back almost 20 percent from its high, David Burtzlaff, a research analyst with Stephens Inc. of Little Rock, said, "I think Car-Mart is doing a very good job in the environment that they're in. They've got positive sales. I think that will continue.

"What's holding them back a little bit is customers, it seems, are holding onto their cars a little longer and maybe going without a car payment. I think that's impacting their sales," he said.

Nevertheless, Burtzlaff said, Car-Mart, which he called well-managed, had been able to maintain a fairly high gross margin. "I think if the economy starts to improve, Car-Mart will come out much better than their competitors."



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