A few hours after I posted the Friday File last week, we got some surprise news from Boston Omaha (BOC) — one of the co-founders and co-CEOs, Alex B. Rozek, has abruptly left the company, leaving CEO Adam Peterson, the other co-founder, in charge, and with control of all the super-voting shares.

That brings up several issues and concerns, and it made some shareholders quite angry, so I’ll just go through and explain why I liked Boston Omaha to begin with, what they’ve done over the past six or seven years in building the company as it exists today, and how the separation of a co-founder impacts them immediately, including the buyout they gave him, and what is likely to happen in the future.

This is a position I built up over the past several years because I like the strategy of the co-founders, and like the way they speak to investors, and I thought from the beginning that their first business to reach commercial scale, the billboard advertising company Link Media Outdoor, was attractive and likely undervalued within the conglomerate (and remains so).  Their other early business that goes back almost to their founding, Surety Insurance, has been a tougher slog as they tried to get to scale, but it has recently become reasonably interesting, finally, and started to contribute to cash flow (COVID also threw a wrench into that business for a couple years).  And their third major business, broadband, was launched by acquiring a bunch of rural broadband companies and building fiber-to-the-home broadband in those areas and in new housing communities.  That’s still very much a capital sink, but because of the nature of that business it should be much better over the long term than it appears in the income statements right now.  They also have always had some smaller investments in outside companies that they don’t control, and they launched a fourth major division within the company called Boston Omaha Asset Management a little over a year ago, hoping to attract some outside capital to speed up some of their broadband work and build a real estate business, but they announced earlier this year that they’re effectively scuttling that business.  (Which might be part of the reason Rozek is leaving… more on that in a moment.)

Boston Omaha has really been a go-anywhere conglomerate, and they have had some big investment winners, including ...