Boston Omaha Corp. (BOMN) — which I first recommended in July 2019 — is an emerging conglomerate; it invests primarily in advertising, insurance, telecommunications, and real estate, explains Steve Mauzy, editor of Wyatt Research's Personal Wealth Advisor.
Most of the businesses are either wholly or partially controlled. Boston Omaha also owns a small portfolio of publicly traded stocks. If the business structure rings vaguely familiar, I’m not surprised. Boston Omaha’s structure resembles that of Berkshire Hathaway (BRK.B).
The similarities extend beyond mere resemblance. Some of Berkshire’s DNA permeates the executive suite. Alex B. Rozek, Boston Omaha’s co-chairman, co-CEO, and co-president, is Warren Buffett’s grandnephew (The “B.” in Rozek’s name stands for Buffett.)
Boston Omaha’s management structure adheres to the Berkshire playbook. You might note the “co” in Rozek’s title. He shares the executive duties with Adam Peterson. They collectively own 50.1% of Boston Omaha’s outstanding shares.
Both extract only a pittance for their considerable duties: Rozek drew a $275,000 salary in 2019. Anderson drew $23,660 (which Rozek drew the year before). Both seek to be rewarded with appreciating Boston Omaha shares.
Images of a Warren Buffett/Charlie Munger partnership are easily conjured, though images are more spry. Rozek will be 42 this year, Peterson will be 39.
My initial investment thesis centered on claiming a stake in a Berkshire-esque company in its formative, “growthier” years of the 1970s. Boston Omaha fits the bill.
The company is a speck compared to Uncle Warren’s Berkshire Hathaway. The former sports a $1.1 billion equity-market cap, the latter a $574 billion equity-market cap.
Boston Omaha is also much more concentrated in its holdings. It controls only three businesses at this early stage: Link Media Outdoor, a billboard advertising company; General Indemnity Group, a business insurer; and AireBeam, a broadband internet-service provider in southern Arizona.
Link Media generated $21 million in revenue and $12 million in operating income over the trailing 12 months. The nature of the business adheres to Buffett’s investment tenets; it produces steady cash flow with low-ongoing capital requirements.
Boston Omaha’s insurance is a no-brainer comparison with Berkshire. Boston Omaha has invested heavily in scaling General Indemnity Group (GIG) after acquiring it in 2016. Operations have been expanded to all 50 states. Economies of scale are materializing.
Had you bought Boston Omaha shares in July 2019 and continued to hold them to this day, your patience would have been rewarded. Our Boston Omaha investment has returned 70% over the past 18 months. A Berkshire Hathaway investment assumed at the same time has returned 13%.
I should highlight the fact that Berkshire Hathaway and Boston Omaha are different animals. Boston Omaha is still in its formative years. It still has much to prove.
Rozek claims he receives no assistance from Uncle Warren or Berkshire Hathaway. Boston Omaha is keen to underplay the familial connection between its co-CEO and the world’s greatest investor.
That said, Buffett has publicly opined on his grandnephew, and favorably so, saying that he "think[s] the world of" Rozek, adding that his young relative has a "very good mind [and] certainly has good values.”
There you have it — a Berkshire-Hathaway-like company of 50 years ago run by a Buffett relative of today. If you have fantasized about owning Berkshire Hathaway during its growth phase of 50 years ago, here’s your opportunity in a close proxy.
