Boston Omaha September Idea Competition
For this stock idea competition, I chose Boston Omaha. My bullet point analysis is below and a full deep dive is linked at the bottom:

Run by Co-CEOs Adam Peterson and Alex Rozek since its founding Boston Omaha ($BOC) went public in 2017. The holding company spans many sectors, but they try to focus on ventures that have 1-3 variables to optimize and then go and optimize them.

Let's break it down:

  1. Billboards
The biggest business and one of the best cash-flowing branches of Boston Omaha is the billboard business. The company owns Link Outdoor Media the 4th biggest billboard brand with ~7,400 faces

  1. Broadband/Fiber
One of the fastest growing branches of the company. They own AireBeam, Utah Broadband, Fiber Fast Homes, and InfoWest (fiber/broadband companies). Between them they have 40k users that have a LTV of $3,000-$7,000.

  1. Insurance
General Indemnity focuses on Surety Insurance a type that insures a “promise” made from one party to another in the event that one party doesn’t follow through.

  1. SkyHarbour $SKYH
A fast growing REIT for private jet hangars. The company holding is from the Yellowstone SPAC which was sponsored by Boston Omaha as well as a holding of warrants in the company.

  1. Boston Omaha Asset Management
Boston Omaha has BOAM to hold many of its other investments and ventures including a significant Dream Finders Homes holding. Also build for rent venture called “Build For Rent”, 24th Street Asset Management (Real Estate), Crescent Bank, Logic Commercial Real Estate, and breezeway.

  1. Stocks
Boston Omaha has an equity portfolio that is not disclosed because it is under $100mm, but with some research it can be deduced that the only holding (and there is only one) Nelnet $NNI. This is a very interesting company that deserves its own deep dive (no spoilers).

  1. Check out the deep dive on $BOC here

  1. Bringing it together
This is very much a bet on management (Adam and Alex). They are still newish, but they have demonstrated strong capital allocation skills and have kept debt to a minimum. They follow the most if not all the pillars and profits have already begun.
Nathan Worden's avatar
Nice and concise, great work!

I know one of the reasons investors like Boston Omaha is the diversification & portfolio approach. They have a 'Berkshire Hathaway' vibe in that respect. How would you respond to the critique that there perhaps isn't enough focus on any one aspect of the business for it to be truly great?
Soren Peterson's avatar
@nathanworden Thank you!

Although there are multiple pieces many of the pieces have individual management structures. This is similar to Berkshire Hathaway. Buffett has said something along the lines of we do not run each individual business but allocate money between them.

For example, Link, SkyHarbour, Dream Finders Homes, General Indemnity, Crescent Bank, and more are all run independently. Even Boston Omaha Asset Management has its own management for the most part.
Nathan Worden's avatar
@soren1 Got it, so the focus of management isn't actually stretched thin between these different business segments, because they each have their own operators. Great to know! Thanks!

That leads to the next question, which is:

What is one example of how the separate businesses benefit from being under the Boston Omaha roof? Why not be more independent? What do they gain by being linked to Boston Omaha?

Soren Peterson's avatar
@nathanworden Exactly!

The "communal capital" within the company can be allocated to where it is most useful. For example, Billboards are a great cash flowing business, but expansion is limited. Boston Omaha has still done some acquisitions to grow this branch, but they have also used capital from the branch to build capital intensive businesses like broadband/fiber or to make equity and/or SPAC sponsorship investments.
Tim Esteben's avatar
If you had to tell Boston Omaha to drop all business segments except for one... which one would you tell them to keep?
Soren Peterson's avatar
@tim_esteben Broadband/Fiber business. I like all of their holdings and many work well already, but going forward it is clear that Broadband/Fiber will become the most important piece.
Tim Esteben's avatar
@soren1 Thanks! What is their competitive positioning when it comes to broadband/Fiber? I'm guessing they'd be up against some large players like Google?
Soren Peterson's avatar
@tim_esteben similar to cable it is about first to market and Boston Omaha has already built a significant presence in the southwest. Also they have a partnership for putting fiber in new homes built by Dream Finders Homes.
Dollars and Sense's avatar
Hey, this was my submission for the August Idea Contest. Great work, love to see the interest in the company growing!
Dollars and Sense's avatar
@nathanworden you are incredibly quick on the draw
Soren Peterson's avatar
@dollarsandsense I’ve been tracking this one for a while and I like it more and more the more I learn about it.
Heavy Moat Investments's avatar
I hear this company mentioned often. Thanks for the bullet points!
Soren Peterson's avatar
@stonkmetal Yes it’s very interesting! Go check out the deep dive to understand it better.
Conor Mac's avatar
Solid job Soren, thanks for sharing!