Huckabee Keeps Holdings in Arm's Reach

The ex-Arkansas governor has a big stake in a local bank well connected to his campaign.
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Editor's note: This is the seventh installment of a series examining the investment holdings and affiliations of the likely 2008 presidential candidates. Click here for our stories on Bill Richardson, Sen. Christopher Dodd, Sen. Hillary Rodham Clinton, Sen. John McCain, Sen. Barack Obama and Rudy Giuliani.

If Bill Clinton's time in the White House is any guide, presidential politics and investments in Arkansas are a bad combination. Now another guy from Hope is trying to change all that.

Former Arkansas governor and Republican presidential hopeful Mike Huckabee has money riding on the beleaguered banking sector in his home state, and his close ties to the industry leave him well connected to keep tabs on his investment.

"The Huck," as he's known in Arkansas, owns between $50,000 and $100,000 worth of

Home Bancshares

(HOMB) - Get Report

, a collection of community banks in Arkansas and Florida that went public last year.

The largest stakeholders in the company have been contributors to Huckabee's political campaigns, its founders were appointed by him to positions in state government, and a local investment bank that financed the hot IPO and now touts the stock also happens to be the largest donor to Huckabee's current bid for the White House.

In the latest installment of its investigation into the investments and business relations of the major presidential candidates for 2008,

unravels the web of relationships between Huckabee, whose net worth was disclosed in a public filing to be anywhere from $350,000 to $900,000, and his local bank.

Ties That Bind

Famous for losing more than 100 pounds in recent years and preaching his antiflab gospel across the country, the onetime Southern Baptist minister recently disclosed that he earned the bulk of his income last year by peddling his latest book,

From Hope to Higher Ground: 12 STOPS to Restoring America's Greatness.

To watch Nat Worden's video take of this column, click here


On top of nearly $150,000 in book royalties, he took home tens of thousands of dollars in speaking fees by appearing at places such as the conservative think tank Washington Policy Center and the Public Health Institute, according to public filings. He also made less-lucrative stops at venues such as Jerry Falwell's Liberty University and Thomas Road Baptist Church. The National Association of Music Manufacturers paid him $40,000 for what its spokeswoman called "consulting with us concerning our music education and public policy efforts."

As for his investment portfolio, Huckabee and his wife own an assortment of mutual fund holdings, along with shares in a speculative health-care service firm called

Flagship Global Health


, where he served as a director, and the consumer-products giant

Procter & Gamble

(PG) - Get Report

. His position in Home Bancshares is notable because it's so close to home.

Alice Stewart, a spokeswoman for Huckabee's campaign, declined to disclose the exact size of his Home Bancshares holdings, and she declined to say when he acquired the position and under what circumstances.

"We have disclosed all that we are required to disclose by the Federal Elections Commission, and we're not going to go into it any further," says Stewart.

With that, it's unclear how Huckabee has fared on his investment so far, but if he held stock in the IPO last June, he has done well. The stock jumped 13% on its first day of trading to $21.50 from its offer price of $18. The following month, it traded as high as $22.88 before losing steam. A year later, the stock was recently trading at $22.

Founded in 1999, Home Bancshares is now composed of four banks in Arkansas and one in the Florida Keys, where its co-founder, chairman and chief executive, John Allison, has been a longtime vacationer and property owner. The former CEO of mobile home manufacturers Spirit Homes and Belmont Homes, Allison is now Home Bancshares' largest shareholder, with roughly a 20% stake.

Records compiled by the

Center For Responsive Politics show that Allison contributed at least $2,000 to Huckabee's campaign in the mid-1990s, and his wife Jennifer contributed $1,000. In the first three years of this decade, Allison gave the Republican Party of Arkansas $10,000, and in 2005, Huckabee appointed him to the Arkansas State Police Commission.

Allison and his wife have been steady contributors to a number of politicians from both parties, and he served on the Arkansas Manufactured Home Commission starting in 1993, before Huckabee became governor in 1996. He could not be reached for comment on this story.

The other co-founder of Home Bancshares, Robert H. "Bunny" Adcock, recently contributed $500 to Huckabee's presidential campaign. In 1996, he donated $1,000 to his campaign, and in 2003, Huckabee appointed him as the Arkansas State Bank Commissioner. During his tenure in that post, which just ended, his Home Bancshares stock holdings were put in a blind trust to prevent conflicts of interest.

Reached at his home in Arkansas, Adcock directed

to Randy Sims, president of Home Bancshares, who could not be reached for comment.

Frank Hickingbotham and his son, Herren, are directors and major stakeholders at Home Bancshares, and both have been contributors to Huckabee's political campaigns. The son recently donated $4,600 to the ex-governor's presidential bid, while the elder gave $2,300. They ran the frozen yogurt giant TCBY Enterprises before the company was sold to

Mrs. Fields Famous Brands

in 2000. Neither returned a phone call seeking comment.

Alex Lieblong, an investor based in Little Rock Arkansas, holds a major stake in Home Bancshares. He recently contributed $2,300 to Huckabee's presidential campaign, and he and his wife have donated thousands to Huckabee over the years.

"The relationship between Mike Huckabee and Home Bancshares is nothing more than an investment relationship," says the company's chief investment officer, Brian Davis.

Through his spokeswoman, Huckabee declined to comment on the relationship or his investment holding.

Close Banking Relationship

With 80% of its loan portfolio in commercial real estate, Home Bancshares has been well insulated so far from the recent sharp slowdowns in residential real estate in Florida and Arkansas, and Stephens analyst Barry McCarver says he expects that to continue. He holds an "overweight" rating on the stock, noting that it has no exposure to subprime housing and that home mortgages make up a small part of Home Bancshares' portfolio.

"They do have good, healthy reserves," says McCarver. "They're in good position to absorb any credit issues that might arise."

McCarver's firm, based in Arkansas, is a top institutional holder of Home Bancshares. It also discloses that it makes a market in the stock, has an investment banking relationship with the company and was an underwriter on last year's IPO.

Acknowledging his firm's close relationship with Home Bancshares, McCarver says his research is "not biased in the least bit," noting that he began coverage on the stock after the IPO with a neutral rating.

"There's no way I can benefit from Home Bancshares going up or down," says McCarver.

According to CRP, Stephens is also the largest donor to Huckabee's presidential campaign, having given over $20,000 to date.

"Mike and Warren have been good friends for a long time," says Huckabee's campaign manager Chip Saltsman, referring to Stephens CEO Warren Stephens. He declined to elaborate on the relationship. A spokesman for Stephens also declined to comment.

One of the few other analysts to track Home Bancshares, Sandler O'Neill & Partners' Joseph Fenech, rates the stock a "hold." Fenech, whose firm also has an investment banking relationship with Home Bancshares, says the shares "look fully valued here." He says the company could be hurt by the slowdown in the Arkansas real estate market.

Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas, says that while the commercial real estate market in Arkansas has yet to see the price declines that have hit the residential market, she sees a buildup in excess inventory, particularly in Northwest Arkansas, where Bentonville-based


(WMT) - Get Report

spurred a wave of development in recent years.

"People were building in that area like crazy, and many of them had the attitude that nothing could go wrong," says Deck. "Now it's unclear who is going to be the tenants for all this development."