Bryan Burrough
Page 45
Paying off the Chase debt, however, took every last cent of the Bass family’s cash flow during the late 1960s. By April 1969, when Perry’s eldest son, twenty-seven-year-old Sid, arrived back in Fort Worth after graduating from Stanford Business School, the debt had finally been paid off. It was then that Perry called Sid into his corner office on the twelfth floor of the new Fort Worth National Bank Building. Everything they had, Perry told his son, was now his to manage. The oil company, renamed Bass Brothers Enterprises, was worth $120 million. With the Chase debt repaid, it was throwing off $1 million in pretax cash flow. “Do what you want,” Perry told Sid. “I’m going sailing.” And he did exactly that, serving as navigator the next several years on his friend Ted Turner’s attempts to win the America’s Cup. Never again would Perry Bass have a significant say in the family’s finances.
On paper, Sid Richardson Bass was hardly the rough-and-tumble oilman his great-uncle Sid Richardson might have selected to guide the family fortune. Slender, blond, and intellectual, what Sid Bass liked to do with oil was paint; a number of his canvasses hung beside the Monets in his parents’ home. (“That one?” Perry liked to josh. “Oh, that’s a Sid Bass.”) But Sid’s second passion was the stock market; he had begun trading stocks as a boy, and he was certain that the kind of modern securities investing he studied at Stanford held the key to the family’s future. His conviction deepened when he finished his first task, a top-to-bottom review of the Bass oil business. It was a godforsaken time to be a Texas oilman. Low-priced Middle Eastern crude was killing them. Bass Brothers, which had five hundred employees in West Texas and Louisiana, was barely breaking even.
If he was going to invest, Sid knew he needed talented people around him; he envisioned a group of five advisers swapping ideas around a conference table. One of his first hires was an energetic Stanford classmate, a twenty-five-year-old Fort Worth kid named Richard Rainwater. Rainwater had grown up middle-class in the city’s Lebanese community; his father had Indian blood, hence the name. Rainwater was hawking stocks for Goldman Sachs in Dallas when Bass hired him. It was the single smartest decision Sid Bass ever made. Rainwater, he soon realized, was the ultimate stock-market nerd, an investing dynamo brimming with ideas. “I wanted to hire five guys,” Sid joked to friends. “But after bringing in Richard, it was pretty clear I wouldn’t need the other four.”
They became a mismatched team, working in adjoining offices and sharing a secretary. Sid, trim and erudite, wore Saville Row suits; Rainwater, tall, swarthy, and painfully blunt, favored weatherbeaten work shirts and collected baseball caps with funny sayings. Sid was uncomfortably aware of both their responsibility and their inexperience. They didn’t know how to do a business deal. They didn’t know how to negotiate. They chose another Stanford classmate, John Scully, to handle their stock trading, shoveling him roughly twenty million dollars in those first few years; their largest investment, several million dollars, was in the Church’s Fried Chicken chain.
“I want to invest in solid companies, with solid management, and stay for the long haul,” Bass told Rainwater.
“You sound like Warren Buffett,” Rainwater remarked.
“Who’s Warren Buffett?” Bass replied. Rainwater had been collecting the little-known Omaha investor’s writings for years, and shared them with Bass, who all but memorized them. Soon the two began reading the works of Benjamin Graham and other Wall Street greats. In terms of an investment philosophy, Sid disagreed with Wall Street wisdom in only one important way. Conventional wisdom held that a modern portfolio should be thoroughly diversified, with a mix of stocks, bonds, and perhaps real estate, the better to weather downturns in any one area. Sid, however, wanted to make fewer investments, but make them large. “You only have so many good ideas in life,” he mused to Rainwater. “Why not put your money in what you really believe?”
Sid’s second idea was venture capital. The biggest returns, he reasoned, would come from putting the family money into tiny start-ups. In their first year together, Bass and Rainwater searched for promising local companies in which to invest. They selected three, including an Italian restaurant with a frozen food business and a Dallas outfit that made telephone equipment. Within months, however, all three companies were faltering. Rainwater, meanwhile, served as Bass’s link to Wall Street; he regularly attended the “road shows” at Goldman Sachs staged by companies touring the country trying to raise money. In 1970 he took in a presentation by a venture capitalist named David Dunn, who was attempting to raise money for a new computer company. Rainwater was so impressed, he invited Dunn to Fort Worth for lunch.
Bass listened, fascinated, as Dunn laid out the way he identified start-up managements in which to invest. Find someone who has been successful before. Don’t ask them to do anything they haven’t done before. Avoid new products; stick with the tried and true. Three simple principles, but they became Bass’s mantra. Afterward, Dunn told Bass he hoped he would invest in his new computer venture. “We’re not gonna do that,” Sid said, smiling. “Because you’ve never done that before.”
Several months later, Dunn’s new venture fell apart when his major investor backed out. Bass hired him on the spot to run the family’s new venture capital arm. Dunn’s first task was to assess the three companies Bass and Rainwater had already invested in. He came back to the Bass offices shaking his head. When Sid asked whether their investments made sense, Dunn cracked, “I’ve never seen so much money in the hands of so little talent in all my life.” Impressed, Bass and Rainwater gave Dunn eight million dollars to start a venture capital fund they called Idanta Partners, headquartered in San Diego. It was a brilliant move. Over the next decade Dunn would invest Bass money in scores of computer start-ups, including Storage Technology and Prime Computer. By 1980 he would turn that initial eight-million-dollar stake into two hundred million dollars.
For the next four years Bass and Rainwater quietly played the stock market. Their returns were decent but not spectacular. They worked alone, just the two of them; any staff they hired, Bass told Rainwater, would just generate ideas they would have to go over again themselves. Every evening they would convene in one of their offices to see what they had learned. Bit by bit, they were building confidence in themselves. Then, in October 1973, came word of the Middle East oil embargo. On November 2, Bass returned from a trip to Wall Street deeply shaken, convinced that oil shortages would soon send the markets into free fall. He told Rainwater he wanted to sell every stock they owned within five days. Rainwater nearly choked. But they did it, unraveling every position they had save Church’s, which had gotten too big.
The day of Bass’s decision, the Dow Jones Industrial Index stood at 921. Within a year it hit 574. He and Rainwater felt like geniuses; their confidence soared. Oil prices, meanwhile, began to rise, quickly quintupling the flow of cash from the Bass-owned oil fields; in the mid-1970s, Bass Brothers threw off between ten and fifteen million dollars in new cash every month for Bass and Rainwater to play with. It was a perfect recipe for investing success: low stock prices, tons of excess cash, and a confidence bordering on the cocky. All through the mid-1970s Bass and Rainwater picked up stocks at bargain prices, soon amassing enough cash to buy entire companies, National Alfalfa in 1976, then the small Pick chain of twenty-two hotels. By 1978 their largest single investment was in Sperry Hutchison, the Wisconsin-based maker of Green Stamps.
Outside Fort Worth, the two young Texans remained unknowns. Slowly, though, Sid was increasing his profile in the city. He and his wife, Anne, a willowy Indianapolis girl he began dating at Yale, joined the Fort Worth Art Museum’s board; Anne proved a charity whirlwind, devoting her time to the Junior League, the Van Cliburn Foundation, the Fort Worth Symphony, and the Fort Worth Country Day School, which Perry Bass had helped found so that his grandchildren wouldn’t have to go to eastern boarding schools, as his children had. In 1972 Sid and Anne completed their dream home on eight wooded acres in the new Westover neighborhood. Designed by the noted New York arc
hitect Paul Rudolph, it was, one writer put it, “one of the most beautiful houses in Texas; serene and white, [rising] out of the treetops in a series of rectangular boxes, one stacked on top of the other, ends jutting out dramatically like cantilevered bridges.” Anne spent several more million dollars on the landscaping and formal gardens. Somehow she still found time to give birth to baby girls.
In 1973 Sid’s mind began drifting toward philanthropy. The Basses gave millions each year to Fort Worth’s three major museums and other causes, but as Sid told his father, what the city really needed was something to bring back its old cow-town pride. The downtown, he saw, was beyond sad, block after block of boarded-up storefronts pockmarked by the odd porn theater. Sid bought up two blocks and was beginning a modest restoration project when Charles Tandy, CEO of Fort Worth’s largest non-oil company, Radio Shack, announced plans for a far more ambitious revitalization. The two men soon joined forces, and by the time they had completed work in 1980, Sid had taken over and modernized a wide swath of downtown, complete with a new Worthington Hotel and two immense glass skyscrapers designed by Paul Rudolph, one thirty-eighty stories, the other thirty-four. Downtown Fort Worth’s most noticeable landmarks, the glow on their glass skins can be seen for miles. Bass Brothers made the new buildings its new world headquarters, but few others followed suit. For years the buildings stood half empty.
By the late 1970s Sid and Anne had emerged as Fort Worth’s first couple. Anne drove a Rolls-Royce Silver Cloud. Sid bought a private jet. Anne was beginning to cut a profile in New York, popping up in fashion magazines and joining the board of the American support group for the Paris Opera. When a New York ballet group performed in Fort Worth, Anne and Sid hosted a glamorous after-party unlike anything the city had ever seen. The world’s greatest ballet dancers, Mikhail Baryshnikov, Peter Martins, and Heather Watts, couldn’t believe the splendor of the Bass home or its art. “It was incredible,” Martins remembered years later. “We knew they were young and rich, but we couldn’t believe when we got to their house. When we came in, there was an orchestra playing. It was… .” He was at a loss for words.
The Basses’ social emergence, however, came with risks neither Sid nor Anne had foreseen. Late one evening in 1973, they were pulling into their garage when Sid spied two black-clad men poised on the roof. As they stepped from the car, the two men appeared behind them, flashing guns and smashing the car’s rear windshield. In the kitchen, the couple was ordered to lay on the floor. Sid was frightened, all the more so because his two infant daughters were upstairs with a babysitter—who promptly saved them all by activating the alarm system. The men ran and were never caught. Afterward Sid had a security gate built and manned around the clock. In later years, when reporters wanted to know why he so studiously avoided the public spotlight, friends sometimes pointed to the events of that night to explain.
All through the late 1970s Bass and Richard Rainwater continued piling up their investment profits. In 1978 they broadened their business by hiring a Wall Street whiz kid named Tim Taylor, who opened a Bass trading floor to perform complex arbitrage trades; in his first full year of operation, Taylor alone brought in eight million dollars in profit. Yet Bass Brothers wasn’t without its challenges. The challenges, in fact, were the brothers. The second Bass brother, Ed, had graduated from Yale in 1968 and after a stint in the Coast Guard had moved to New Mexico, where he designed and built adobe houses, made pottery, and became involved with a counterculture commune called the Synergia Ranch; some called it a cult. Of his siblings, Sid was closest to his youngest brother, trim, deferential Lee, born in 1956, who would join Bass Brothers in the early 1980s. The two were fifteen years apart but close in temperament. Sid treated Lee almost like a son.
For Sid, the headache was always the third brother, Robert, known as Bob. Three years his junior and boyishly handsome, with prematurely graying hair and rimless eyeglasses, Bob Bass had married the only girl he ever dated, a Fort Worth accountant’s daughter named Anne; around town, everyone called her Little Anne, to differentiate her from Sid’s wife. Bob and Little Anne met when his parents threw him a party for his thirteenth birthday and had never parted; so tight were the two that Bob had gotten permission from his parents to marry while still at Yale. Sid always suspected that Bob’s problem was a keen sense of entitlement; while the rest of the Basses acted vaguely embarrassed by their fortune, Bob seemed to genuinely love being rich. When he first arrived at Bass Brothers in 1974, Sid tried to give him something to do. As far as he could tell, however, Bob simply sat in his office, noodling around with the occasional real estate deal.
Bob, his brothers felt, deeply resented Sid’s leadership position. He seldom if ever invited Sid to his home. Bob was no closer to his parents; when his mother would bring over Christmas presents, she was seldom invited inside. In those first, cautious years together at Bass Brothers in the 1970s, Bob and Sid managed a strained if peaceful coexistence. Their relationship was a rare blemish in what, for Sid at least, was a glorious life. Still, by 1979, everything was beginning to change. The family’s long years of anonymity were poised to end. A new decade was dawning, the 1980s, and for Sid Bass, who turned thirty-eight that year, nothing—his marriage, his money, his partners, his fame, his family—would ever be the same again.
IV.
The passing of H. L. Hunt, like that of the Soviet Union or Tito’s Yugoslavia, unleashed years of pent-up frustrations among the thirteen children of his three families. It didn’t happen overnight, in large part because Hunt’s will, filed in a Dallas probate court the day after his funeral, stated that any family member who challenged its tenets would receive nothing. To his first family’s dismay, Hunt left the bulk of his assets, including Mount Vernon and his 80 percent stake in Hunt Oil—its stock valued at roughly $125 million—to his wife, Ruth. But that wasn’t the shocker. What stunned everyone was that Hunt had named as his sole executor not Bunker or Herbert or Lamar but a new actor in the Hunt drama, Ruth’s thirty-one-year-old son, Ray Hunt.
Ray was the baby whose 1943 birth had inaugurated Hunt’s secret life with Ruth. Born Ray Wright, he had become Ray Hunt at fourteen when the second family moved into Mount Vernon following Lyda Hunt’s death. Blond, handsome, and popular, Ray had been senior class president at Dallas’s St. Mark’s prep school before heading to SMU, where upon graduation he married and joined Hunt Oil as a vice president in the mid-1960s. He had a tough time of it; while he enjoyed a congenial if distant relationship with his father, Bunker and Herbert shunned him, refusing to invite him into their deals or their homes.
Blocked from anything but a salaried position at Hunt Oil, Ray struck out on his own in 1969, buying a dude ranch in Lewisville, north of Dallas. Like all the Hunts, he thought big. He branched out into commercial real estate, and in 1974 stunned Dallas by proposing the largest development in downtown history, a multiblock collection of office towers, theaters, and a new arena called the Reunion Center, all of it to be topped by a massive geodysic ball. At the time of his father’s death, Ray was the acknowledged head of the “third” Hunt family. His older sister, June, had begun what would become a long career as a Christian singer and inspirational speaker. The middle daughter, Helen, was a housewife. The youngest, Swanee, had married a minister and settled in Denver, where she and her husband ran a home for the emotionally disturbed. None had much to do with the first family.
But now, as executor of H. L. Hunt’s estate, Ray found himself thrust into the first family’s daily lives. Hunt Oil, which he now controlled on his mother’s behalf, served as the umbrella organization for everyone’s finances, administering the flow of money and paperwork for all the children’s trusts and investments; it was the family office. Ray moved into his father’s corner suite and began trying to make sense of it all. In those first hectic weeks after the funeral, there were dozens of issues he needed to hash over with Bunker and Herbert, but to his frustration, though his half brothers had offices on the twenty-ninth floor as well, neithe
r would return his phone calls. It was sheer petulance. The first family had ignored Ray for years; they weren’t about to acknowledge him as the Hunt family’s de facto head.
Bunker and Herbert, meanwhile, wasted little time distancing their interests from Ray’s. While Bunker and his siblings still owned 18 percent of Hunt Oil, they controlled the far larger Placid Oil outright, and their trusts controlled Penrod, the drilling subsidiary. That fall, while their father lay in the hospital, Bunker and Herbert had initiated a rare hostile tender offer for the nation’s largest sugar refiner, Great Western United, and after a brief legal tussle, managed to win control that January; it was the first time any of the Hunts had taken over a publicly held company, and many on Wall Street wondered why, given the regulatory and media interest it would bring. Then, in January 1975, six weeks after their father’s death, Bunker and Herbert took their first step toward severing their businesses from Hunt Oil’s, forming a new company, Hunt Energy Corporation, with an aggressive million-dollar exploration budget. They didn’t bother to tell Ray, who found out anyway and redoubled his efforts to talk with them.
When one of his messages crossed Bunker’s desk in early February, Bunker read it. “Ray wants to see us?” he asked Herbert in mock surprise. “Well, I guess we better go see him then.” 6
There, at a meeting in Ray’s corner office, Bunker and Herbert informed their half brother that they were switching all the first family’s administrative affairs from Hunt Oil to the new Hunt Energy, which would take over Placid’s old space on the twenty-fifth floor; Bunker and Herbert were moving their offices downstairs as well. It was by all accounts a civil meeting. Bunker and Herbert had no problem with Ray assuming their father’s position as president of Hunt Oil; they agreed to maintain seats on its board. Otherwise, everything would go on as it had before. They even promised to return each other’s phone calls.