We came across a bullish thesis on Boston Omaha Corporation (BOC) on Substack by Soren Peterson. In this article, we will summarize the bulls’ thesis on BOC. Boston Omaha Corporation (BOC)’s share was trading at $14.61 as of Feb 21st.
A busy street with pedestrians and cars, a billboard advertising the public company’s services in the background.
Boston Omaha (BOC) has seen a significant decline from its 2021 highs, but this sharp correction may be an overreaction rather than a justified repricing. The company’s reputation took a hit following the departure of co-CEO Alex Rozek, which created uncertainty about its future direction. However, with Adam Peterson now leading the company as sole CEO, the focus has shifted toward optimizing existing business units rather than pursuing new ventures. This renewed clarity presents an opportunity to reassess Boston Omaha’s valuation and long-term potential.
The company’s largest segment, Link Media, is the sixth-largest U.S. billboard operator with 7,600 faces. While not a high-growth business, it serves as a cash-generating asset, benefiting from cost efficiencies such as land lease renegotiations and easement purchases. Meanwhile, the broadband segment, Boston Omaha Broadband (BOB), is more complex, consisting of multiple fiber and broadband businesses. While AireBeam, InfoWest, and Utah Broadband collectively operate near breakeven with impressive gross margins of 79.2%, high investment costs have delayed profitability. The Fiber Fast Homes (FFH) division remains a challenge, with negative gross margins, but future subscriber growth in new housing developments could unlock additional revenue potential.
The company’s insurance arm, General Indemnity Group (GIG), has emerged as a strong performer. With $19.2 million in gross written premiums and a near doubling of net income, this segment is now viewed as an attractive area for reinvestment rather than a capital sink. The shift in management’s perspective suggests a more disciplined approach to capital allocation under the new leadership. Additionally, Boston Omaha’s investment in SkyHarbour (SKYH), a specialty REIT-style private aircraft hangar rental business, remains a valuable asset. The company holds Class A shares valued at $134.7 million and warrants worth $18.8 million, which have potential upside if SkyHarbour’s stock surpasses $11.50 per share.
Valuation-wise, Boston Omaha appears undervalued. Link Media, at a conservative 20x earnings multiple, could be worth around $140 million. The broadband business, using prior management estimates of $3,000 per subscriber, suggests a valuation of $136.8 million. Investments, primarily in SkyHarbour, hold a GAAP value of $123.5 million but could be worth closer to $186.8 million at market value. Adding these components, along with the company’s cash position, results in a fair value estimate of $492.7 million—above its current market cap of $458.37 million, without even factoring in its insurance business and other assets.
Despite past missteps, Boston Omaha remains well-positioned for long-term growth. The management team’s sharpened focus on efficiency is already yielding results in key business units, particularly insurance and billboards. While uncertainties remain in the broadband segment, the current valuation provides a margin of safety. Investors willing to look past recent turbulence may find Boston Omaha to be an attractive opportunity, with significant upside as the company continues to execute its streamlined strategy.
Boston Omaha Corporation (BOC) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 9 hedge fund portfolios held BOC at the end of the third quarter which was 11 in the previous quarter. While we acknowledge the risk and potential of BOC as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than BOC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.