Shares of Boston Omaha (NASDAQ: BOMN) advanced 14.7% in the first six months of 2021, according to data from S&P Global Market Intelligence. The conglomerate, which owns and operates billboard, insurance, and broadband businesses, saw one of its minority investments soar, due to an initial public offering (IPO) in January.
One of the big reasons for Boston Omaha’s rise, and why the stock was up 70% year to date in February, was the IPO of Dream Finders Homes (NASDAQ: DFH). From 2017-2019, Boston Omaha invested $22 million into Dream Finders Homes, and the 4.8 million shares it now owns are currently worth just under $100 million. Boston Omaha’s market cap is only $876 million, so the gain from this investment is very meaningful to its intrinsic value.
Boston Omaha has many minority investments like Dream Finders Homes but also operates some wholly owned businesses in billboard advertising, surety insurance, and broadband communications. In 2020, billboard advertising stalled out (fewer people on the roads), and surety insurance underwriting stagnated due to the COVID-19 pandemic.
This can be seen in the company’s Q1 results, with billboard rentals down from Q1 2020 and premiums earned from insurance cut in half. While this looks bad, these two businesses should recover shortly, along with the steady recovery of the U.S. economy.
Broadband was the gem of Boston Omaha’s business so far in 2021. With the company’s acquisitions of AireBeam and Utah Broadband in 2020, revenue from this segment soared to $3.8 million in the first quarter of this year. In its 2020 annual letter, Boston Omaha co-CEOs Alex Rozek and Adam Peterson said they plan to continue investing in its broadband subsidiary and have recently partnered with Dream Finders Homes to bring fiber internet to new home builds.
Boston Omaha stock is up a good amount so far in 2021. It has a market cap that’s still under $1 billion and two strong capital allocators at the helm (Rozek and Peterson), so there’s no reason to think you’ve missed the boat with the company’s stock.
This isn’t a fast-paced, high growth software stock, but if management can continue making investments as it has with Dream Finders Homes while also growing its insurance, billboard, and broadband operations over the long term, Boston Omaha could be worth much more than $876 million a decade from now.
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