Boston Omaha, the public parent of Link Media Outdoor, released its 2019 10k.  Three things in the 133 page document caught Insider’s eye.

The pause that refreshes. 

Link Media Outdoor closed two acquisitions (Image outdoor and Alpha Displays) for $8.3 million in 2019 versus 3 acquisitions (Tammy Lynn, Key and Waitt) totaling $138 million in 2018.  The pause allowed management to integrate the large transactions and get ready for the next round.  Link has a war chest consisting of $91 million of unrestricted cash and treasuries, $22 million of availability on a bank line of credit and the ability to issue new stock.  The 10k says there will be more acquisitions: “We expect to continue to seek additional acquisitions in out-of-home-advertising when they can be made at what we believe to be attractive prices…”

Smaller markets and strictly roadside.

Boston Omaha’s plant is small to medium market and includes no transit or airport.  You can see this in the monthly revenue per face figure which is only $400.  You can also see it in lease costs which are 22% of revenue.  OUTFRONT’s billboard lease expense equals 35% of billboard revenues because it is concentrated in top 100 markets with sophisticated landlords.  OUTFRONT’s transit costs are 59% of revenues.  Here are the numbers for Link Media Outdoor

A capital gains play, not a REIT

Boston Omaha’s managers – Adam Peterson and Alex Buffet Rozek – are following the Warren Buffett playbook.  Invest long term in great businesses and let gains compound.  Don’t expect current income.  Here’s Boston Omaha’s dividend policy: “We have never declared of paid any cash dividends on our capital stock.   We currently intend to retain all our future earnings, if any, to finance the growth and development of our business.  We are not required to pay any future dividends and our stockholders will not be guaranteed, or have contractual or other rights to receive, dividends.”

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