BOC - Boston Omaha: Undervalued Gem Or Dangerous Investment

2025-04-04 17:11:37 ET

Summary

• Boston Omaha, a sub-$500M market cap company, operates in billboards, broadband, and insurance, with high regulatory barriers and a low leverage of below 15% long-term debt to capital.
• Despite internal turmoil and a recent CEO change, the company remains focused on its core assets and has initiated a $20M share buyback program.
• The billboard business is highly attractive due to stable revenues and regulatory restrictions, while the broadband segment faces uncertainty but potential growth through government grants.
• Investors have seen negative returns over the past five years, and the lack of dividends means returns are solely dependent on share price performance, which has been poor.

Dear readers/followers,

In this article, I'll be looking at a sub-$500M market cap business, but one that has received (and rightly so) quite a bit of attention from many investors over the past few years. This is one of those almost owner-operated businesses that operates in a very high-moat area (one of them), and in several others that don't seem to have much correlation with the former. It was originally known as REO Plus, but changed its name to Boston-Omaha about 9 years ago.

The main appeal to anyone investing in the company is the 'moat-worthiness' and the entry barriers of that advertising segment, which focuses on managing over 4,000 billboard structures with about 7,500+ faces, the revenue of which has high regulatory barriers due to how things like this are managed in the US.

Boston Omaha is unrated; it cannot be viewed in terms of P/E (because the P/E is negative, and the company's current price trades at -266x P/E), and we instead have to view the company through a different lens. The company also comes with a very low leverage of below 15% long-term debt to capital....

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