Boston Omaha (BOC -0.39%) isn't exactly a household name, but the company could be worth a closer look for patient long-term investors. In this Fool Live video clip, recorded on Jan. 10, Fool.com contributors Matt Frankel and Jason Hall discuss why this company -- which often draws comparisons to an early-stage Berkshire Hathaway -- is one of their highest-conviction stocks to buy in 2022.
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Matt Frankel: This is Boston Omaha Corporation, ticker symbol BOMN.
Jason Hall: I'm working hard to make it one of my largest holdings. At this price, I think it's worth it. I wanted to share this chart here, because you were talking about with Lemonade, Matt, people don't know how to price it. Don't really know how to value it. Looking at this chart of Boston Omaha, I think you could say exactly the same thing.
This stock has been an absolute roller coaster since the beginning of 2021. It's actually up a tiny bit since the beginning of that year. But as in all things with investing, perspective depends on where you're standing and looking from. If your perspective is one of those highs, you could be down substantially. What does Boston Omaha do? Essentially, it's a holding company.
This is a holding company with two co-founders and co-CEOs, who are young guys, who have a vision to use the disciplined approach to acquire businesses that generate steady consistent cash flows. You use those cash flows, rinse, and repeat. They're also using other methods. There's a SPAC. They've taken equity investments so not just wholly acquired subsidiaries, but also equity investments are building out that Berkshire-style portfolio. There's insurance operations, there's a billboards business, they're growing a broadband business. They're owning these cash cow businesses that generate great free cash flow.
I think investors generally just have struggled to really both value it, but also think about do you trust these two co-CEOs to allocate that capital and grow this business over time, build up the book value. I think the reality is that there is risk here because you're counting on two people to allocate capital and one of the most difficult ways to do it, that's find other businesses that expect your requirements and then buy them for a fair price and generate a market-beating return from those purchases. This isn't having a great idea for business and then focusing on that vision to disrupt industries or grow market share, those sorts of things. Going out and buying other things is the hardest way to do it. I think there's a lot of concern about that.
Trades for about 1.7 times book value, I think that's cheap. If you look at their history so far as a public company, they have been able to consistently grow book value per share every year. It's also a cash-positive business operating cash flow since the beginning of 2020. They've generated a positive cash flow every year. It looks like the trajectory very well could be your worst performer of this batch this year because there's not really a lot management can do. I don't think they necessarily answer those questions because it's still a really small business, it's under-followed. But I think over the next 10 years, it could be the best performer of this group by a long shot.
Frankel: Yeah, I would agree with that. I think management's making all the right moves lately. They had a SPAC, they're doing their conglomerate building in a 21st century way with taking an aviation infrastructure company public called Sky Harbor, which is going to be their biggest investment to date. Boston Omaha just announced they're going to commit an additional $45 million beyond what they had already planned to it. They're investing $100 million in this. Essentially, they build out airport hangars. That's not an exciting business. These are boring, but high-potential businesses.
They also started to build-to-rent home business in Nevada, where they're building town homes and things like that, especially to rent, which is a very hot market right now, which they started in the third quarter of 2021 and have made I think six deals, six separate investments since. They're deploying capital. They're not doing it in the sexiest ways, I guess you'd say. But this is a business that is designed to build long-term wealth for its shareholders. Whether it outperforms the market in 2022, like Jason said, who knows? But as far as stocks that I would pour my money into at the current price, Boston Omaha is near the top of the list.
