We came across a bullish thesis on Boston Omaha Corporation (BOC) on Substack by Steve Wagner. In this article, we will summarize the bulls’ thesis on BOC. Boston Omaha Corporation (BOC)’s share was trading at $14.26 as of March 28th.
Photo by Mika Baumeister on Unsplash
Boston Omaha Corporation (BOC) wrapped up 2024 with solid revenue growth across its core segments, despite a one-time severance expense that led to a minor net loss. The $4.1 million charge related to the departure of a former co-CEO temporarily impacted reported earnings, but this was a non-recurring event and has already been absorbed. Offsetting this expense, BOC recorded a $2 million non-cash gain from the transfer of Sky Harbour Group shares as part of the executive transition. These adjustments reflect a short-term clean-up rather than any operational weakness, and with these issues behind it, the company is well-positioned for continued growth. Despite the net loss, cash flow generation remained strong, and BOC’s book value per share (BVPS) declined only slightly to $16.99 from $17.19, a drop largely due to depreciation expenses and accounting losses from equity-method investments like Sky Harbour. However, the market value of these investments far exceeds their recorded book value, which suggests that GAAP book value significantly understates BOC’s true asset value. Management remains confident in the company’s financial position, emphasizing that these accounting effects do not reflect a decline in intrinsic value.
BOC continues to establish itself as a diversified holding company with four core operating businesses—billboards, broadband, surety insurance, and asset management—while maintaining strategic minority investments, including a sizable stake in Sky Harbour. The billboard division, Link Media, remains a stable, cash-generating business, growing revenue by 5.2% to $45.15 million in 2024. Adjusted EBITDA increased by 9.8% to $17.6 million, benefiting from operating leverage and cost efficiencies. Link Media expanded its footprint to 7,600 billboard faces and increased its digital billboard count to 104, further enhancing its long-term revenue potential. This segment continues to provide steady cash flow while offering opportunities for incremental growth through acquisitions and digital conversions.
BOC’s broadband division was a key driver of top-line growth, with revenue rising 10.6% to $39.1 million. The company aggressively expanded its fiber network, adding 13,300 new fiber passings and 6,100 new subscribers, bringing total customers above 46,000. While heavy infrastructure investments pushed capital expenditures to $29.5 million, adjusted EBITDA nearly doubled to $5.8 million and would have been closer to $11.1 million excluding startup costs from the Fiber Fast Homes (FFH) initiative. The broadband business is now at an inflection point, transitioning from high capital expenditures to a phase of stronger cash flow generation. With infrastructure investments largely in place, profitability is set to improve in 2025 as subscriber growth outpaces costs.
The insurance segment, General Indemnity Group (UCS), delivered standout performance, with gross written premiums rising 40.4% and earned premiums climbing 41.8% to $19.76 million. Total revenue surged 37% to $21.7 million, while adjusted EBITDA jumped 54% to $2.8 million. Strong underwriting profitability and market expansion enabled net income growth of 32%. Management bolstered capital reserves, positioning the segment for continued double-digit growth in 2025 without requiring external capital. With a favorable industry backdrop, UCS is poised to scale further while maintaining strong margins.
BOC’s asset management arm contributed $18 million in distributions, primarily from real estate fund sales and fair value gains. The company’s 16.4% stake in Sky Harbour resulted in a $17.3 million accounting loss, but this was largely offset by a $17 million unrealized warrant gain. BOC also sold a portion of its Sky Harbour holdings, generating a $1.1 million realized gain. While Sky Harbour remains in an early growth phase, any operational progress or stock price appreciation could unlock significant upside for BOC. Additionally, its broader investment portfolio, including stakes in a community bank and real estate ventures, provides optionality for future value creation.
Looking ahead to 2025, BOC is entering a critical phase where past investments will begin to translate into enhanced cash flow. The broadband segment is shifting toward profitability as subscriber additions outpace network build-out costs. The insurance business, now well-capitalized, can continue scaling without further capital injections. The billboard division remains a steady cash generator, with further upside from digital conversions and land acquisitions. Management remains disciplined in capital allocation, balancing reinvestments with opportunistic share repurchases. With the stock trading below book value, buybacks could provide an attractive return on capital while enhancing per-share intrinsic value.
Unlike many companies, BOC does not issue formal earnings guidance, but management’s decision to delay its 2025 annual meeting until mid-year suggests confidence in its business trajectory. By that time, the company expects clearer visibility on broadband profitability, further growth in insurance and billboards, and potential portfolio optimizations. Investors should focus on key operational metrics—fiber passings, billboard acquisitions, and insurance premium growth—rather than traditional earnings forecasts.
A sum-of-the-parts (SOTP) valuation highlights the undervaluation of BOC’s stock. Based on segment estimates—$158 million for billboards, $78 million for broadband, $40 million for insurance, and $250 million for investment holdings—BOC’s total equity value stands at roughly $553 million. With 31.45 million shares outstanding, this implies a fair value of $17.50 per share, well above the current market price.
Ultimately, BOC enters 2025 with strong momentum across its operating businesses. With foundational investments in broadband largely complete and cash flow generation set to accelerate, the company is transitioning from a buildout phase to a period of operational scaling. Management remains focused on disciplined capital deployment, ensuring long-term value creation. While the market has been slow to recognize BOC’s improving fundamentals, the combination of organic growth, strategic investments, and potential share repurchases presents a compelling risk-reward opportunity. Investors with a long-term perspective may find BOC an attractive opportunity before the market fully prices in its underlying value.
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 fourth 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.