I posted these notes separately from the rest of this week’s Friday File, since they were getting a bit long — you can see my other comments and transactions for the week here.

Boston Omaha (BOC) is getting a lot more interesting as it lingers around $20, and there was indeed a good crowd of Berkshire folks who stayed in town for the Boston Omaha meeting on Monday this week (and asked some tougher questions than BOC often gets at these things)… but the lingering fear among investors, I expect, is that there might be dilution ahead. Most of their early capital went into buying billboards… and most of the capital they have now, and want to raise in the future, is going into expanding fiber-to-the home investments both in new homebuilder developments and in rural areas.

Boston Omaha’s leaders have really gotten excited about the opportunities in building out their fiber-to-the home networks, most visibly as they extend the rural broadband networks that they’ve acquired in Utah and Arizona, but also, and at higher profitability, in partnership with major homebuilders who will partner with them to run fiber to new communities. In person, they give the impression of being so impressed with the economics of the business they have built so far that they’re almost desperate to invest a lot more cash in expanding broadband than they have available. They characterized the fiber-to-the home buildout in general as a “land grab”, where it’s imperative to acquire as many customers as they can in the next few years, and that’s both interesting and a little worrisome, because the up front capital investment for these projects can be gargantuan. It pays for itself really, really well… but sometimes not for many years.

So that’s the balance — it’s really easy to justify Boston Omaha’s valuation at a much higher level than it carries today, given the mostly intelligent investments they’ve made in the past and the steady cash flow from their large billboard business, but it’s not easy to predict when the things that most investors look for, like free cash flow or earnings per share, will pick up. I’m reassured, after hearing the co-CEOs hold forth for a couple hours in response to questions, that they are acquiring good tax-efficient assets which will create value for shareholders over the next ten or twenty years, but they are ...