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Caroline Hunt's Soured Investment : Wealth: One of the nation's richest women has lost a bundle on stock in First Executive. Now her trust is bidding for the Los Angeles insurance company.

February 09, 1990|J. MICHAEL KENNEDY | TIMES STAFF WRITER

For much of her 66 years, Caroline Rose Hunt, one of the nation's wealthiest women, focused her attention on doing good works and raising five children. More often than not, she shunned the spotlight that was hers for the asking, merely by virtue of being one of the Hunt dynasty of Dallas.

It was only in the last decade, when she took an interest in the buying and promotion of luxury hotels--including the Bel-Air Hotel in Los Angeles--that her name began to appear not only in the society columns but also the business pages.

Her name has again come to the fore recently with an offer by a unit of the Caroline Hunt Trust Estate to purchase controversial First Executive Corp., the Los Angeles-based life insurance concern best known for its huge junk bond holdings. The offer expired this week without a response from First Executive, but another offer is widely expected.

First Executive's stock plunged last month after the company announced that it would take a $515-million charge against earnings to account for the declining value of its junk bond portfolio.

Analysts have said the bid by the Caroline Trust, as it is known, is an effort to bolster public confidence in the struggling company. (One condition of the offer was that First Executive's chairman, Fred Carr, would have to resign from the company.) Rosewood Financial Inc., one of five corporations within the trust, owns almost 10% of First Executive's common stock.

While Caroline Hunt's name is on the trust, executives within Rosewood and outside analysts portray her role in setting investment strategy as almost negligible.

"She's not a part of making those decisions," said Charles Tusa, a senior vice president of Rosewood.

Robert D. Zimmerman, who was in charge of the trust's hotel management branch for 10 years before leaving last year to form his own company, said, "She lets her companies run themselves with her people, including family members, in on the decision making."

Bruce Benteman of Wealth Monitors, a Kansas City, Mo., investment firm that tracks the portfolios of the nation's wealthiest people, said Hunt's style when it comes to the trust is to keep it at arm's distance. She is not even a member of the advisory board that runs it. Her presence is felt, though, by the fact that her children are involved in the trust's activities, particularly her oldest son, Stephen Sands.

"She surrounds herself with good people," Benteman said. "They are the best that money can buy."

But the trust may have "stubbed its toe" by investing so heavily in First Executive, Benteman said, and it now appeared to be trying to bail out the ailing company by making the purchase offer. (Rosewood originally invested about $103 million in First Executive stock, but at current prices the stake is worth only about $27.5 million.)

On balance, though, it is difficult to argue with Caroline Hunt's policy of letting others manage her fortune, though the downturn in oil and Texas real estate is sure to have had a negative effect on the trust.

She is regularly ranked as one of the wealthiest women in the nation. And while her brothers--Nelson Bunker, William Herbert and Lamar--retain only a fraction of what was one of the largest fortunes in the world before their adventures in attempting to corner the silver market a decade ago, Caroline Hunt remains a perennial entry on any list of America's richest people. Forbes magazine last year estimated her worth at $800 million, including the assets of the trust.

The second daughter of famed wildcatter H. L. Hunt, she is known as the kind of woman who prunes her own trees, cooks her own dinner and enjoys finding a bargain when she is shopping for clothes. The author of a book of pumpkin recipes, she was once asked by the Dallas Morning News whom she most resembled.

"People say Mary Martin. I say thank you," she replied. A graduate of Mary Baldwin College in Virginia, she married a Navy pilot, Lloyd Sands. While he was off in World War II, she worked first in her father's Dallas office, then as a sales clerk at the Neiman Marcus department store.

The couple had five children before they divorced in 1973 and she married Buddy Schoellkopf, who came from a prominent Dallas family. They too were later divorced.

The entry into the hotel business began in 1979, when her children bought a rundown mansion in Dallas and spent $20 million for a nine-story hotel building next to it. Today, the Mansion on Turtle Creek is considered one of Dallas' finest.

Hunt had in the past left most of the dealings of the trust to others, but the hotel business seemed to attract her interest. The construction of the tony Remington Hotel in Houston, the purchase of the Bel-Air and the Hotel Hana-Maui in Hawaii followed over the next five years, as did the building of the Crescent Court Hotel near downtown Dallas. While the trust handled the purchases, Hunt lent her name to the projects as a representative of the trust.

"Business activities and publicizing are two different things," said Tusa. "She's been a tremendous help in that area."

Since then, the hotel investments of the trust have been pared back by more than half. Both the Bel-Air and the Hana-Maui hotels were sold last year for staggering profits, and the Remington was disposed of in 1985. There have been persistent rumors that the hotels were sold to give the trust a cash infusion because of losses in other areas.

"If you look at the real estate market and oil, you have to put that together," said Zimmerman.

ROSEWOOD OFFER EXPIRES: A conditional offer by Rosewood Financial to acquire First Executive Corp. expired without any response from First Executive's board. D5

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