Boston Omaha Corporation (BOC)

A Deep-Dive into the boring & very misunderstood “mini Berkshire Hathaway”

Boston Omaha Corporation is a publicly traded holding company with a diverse portfolio of businesses, often drawing comparisons to Berkshire Hathaway in its early days. Boston Omaha operates with a long-term value investing approach, seeking to acquire and grow businesses in a variety of sectors. This in-depth analysis will explore Boston Omaha's business model, its subsidiaries, its key financials, and its notable investment in Sky Harbour Group Corporation SKYH 0.00%↑. We will also dive into Sky Harbour's business model and recent developments.

Boston Omaha Corporation

Founded in 2015 and headquartered in Omaha, Nebraska, Boston Omaha is led by Chairman and CEO Adam Peterson. Following the departure of co-CEO Alex Rozek in May 2024, Peterson now leads the company. Boston Omaha Corporation BOC 0.00%↑ is best described as a public holding company with four core businesses: Broadband (telecommunications services), Billboards (outdoor advertising), Bonds (surety insurance) and Asset Management. The company's investment philosophy centers on acquiring and operating businesses with durable competitive advantages, strong cash flows, and the potential for long-term growth. The company is guided by a mission to identify and cultivate undervalued assets across diverse sectors, aiming to generate long-term value for its shareholders.

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Boston Omaha's Business Segments

Broadband

Boston Omaha's broadband business is operated through Fiber Fast Homes, which provides high-speed internet services to residential customers. The company focuses on building and operating fiber-optic networks in underserved areas, offering a competitive alternative to traditional cable and DSL providers. Fiber Fast Homes has been expanding its footprint in recent years, driven by increasing demand for reliable high-speed internet access. This segment generated $9.7 million in revenue in the third quarter of 2024, demonstrating its growth potential.

Billboards

The billboard segment is a significant contributor to Boston Omaha's revenue. The company owns and operates a portfolio of outdoor advertising structures, primarily billboards, strategically located in high-traffic areas. This business benefits from stable cash flows and the potential for long-term growth as advertisers continue to utilize outdoor advertising to reach their target audiences. In the third quarter of 2024, billboard rentals reached $11.5 million, making it the largest revenue-generating segment for Boston Omaha .

Surety Insurance

Boston Omaha's surety insurance business is conducted through General Indemnity Group. Surety bonds are a specialized form of insurance that guarantees the performance of an obligation, such as the completion of a construction project or the fulfillment of a contract. This segment provides a steady stream of income and diversification to Boston Omaha's portfolio. Premiums earned in this segment reached $5.4 million in the third quarter of 2024.

Asset Management

Boston Omaha's asset management division manages investments across various asset classes. This includes public equities, private equity, and real estate. The company's investment approach is characterized by a long-term focus and a value-oriented philosophy. This segment allows Boston Omaha to allocate capital to a variety of investment opportunities, potentially generating significant returns over time.

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Why Boston Omaha's Stock Remains Undervalued

Boston Omaha, a company with a diverse portfolio of businesses spanning insurance, billboards, broadband, and more, presents a compelling investment thesis on paper. Yet, despite its promising segments and underlying value, the company's stock performance has left investors scratching their heads. This perplexing underperformance can be attributed to a confluence of factors that have created a shroud of uncertainty around the company, hindering its true potential from being reflected in its market valuation.