To be compared with Warren Buffett or the company he founded is quite a compliment. It's rare to find a company that's really following in Buffett's footsteps, but Boston Omaha (BOC -0.93%) is one conglomerate that is. On a Fool Live episode recorded on June 24, Fool contributors Matthew Frankel and Brian Withers discuss what this Berkshire Hathaway copycat has going for it and why you might want to invest in this proven business model.

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Matthew Frankel: Stocks that are down big, I am going to talk about one of my favorite companies to talk about that people either seem to love or hate this stock, it's called Boston Omaha Corporation, ticker symbol is BOMN. It's one of the smaller stocks we regularly cover here at the Fool. Market cap is just about $950 million, not billion, million. It's really rare that we cover any company that's market cap is in the millions. This company is down about 35% from its highs earlier this year.

Boston Omaha is often compared to an early-stage Berkshire Hathaway, which I think that might be overstating where the company is going to go in, in time. There is obviously a lot that has to happen to build a half-trillion-dollar conglomerate out of nothing, but the comparisons definitely makes sense. For one thing, one of the CEOs is Warren Buffett's great-nephew, which doesn't hurt the comparison. His name's Alex B Rozek and that's what the B stands for, Buffett.

They are using the conglomerate model. They have three main business lines. The biggest by far right now is outdoor advertising. They own about 3,200 billboard faces through their Link Media subsidiary, that's business line number one. Business line number two is insurance, another Berkshire comparison. They have a surety bond insurance business called General Indemnity. Third, the newest and the business they're prioritizing right now is rural broadband service. Brian's been to the mountains in North Carolina, so he knows that Wi-Fi access is not universal there or good internet access is not a given when you go into the mountains, or into any rural areas like that.

They have two subsidiaries, one's called AireBeam, one's called Utah Broadband. They operate in Arizona in Utah. They have got 17,000 customers right now, this is a huge addressable market and the economics of it are fantastic. Right now, even with the limited scale of its business, Boston Omaha's rural broadband has an 86% gross margin. That's pretty impressive, especially for a smaller-scale business, that should only grow as it gets bigger.

In addition to the three core business lines, they have a few minority investments in things like banks and real estate businesses, things like that. They own 5% of a company that recently went public called Dream Finders Homes, one of my favorite homebuilders. This is one of the reasons people are so impressed with their capital allocation skills. They paid $10 million for their Dream Finders stake that's worth about $110 million right now, just a few years ago. That's a pretty successful investment.

Because it's 2021, they have a SPAC. Boston Omaha launched a SPAC called Yellowstone Acquisition Corp, that's still looking for an acquisition target. They have till early 2022 to find it. Regardless of what you think of the SPAC craze in the hundreds of SPACs that are out there, the economics of SPACs really favor the sponsor. This is one of the reasons why they're a controversial form of investment. There are very few ways you can invest in a publicly traded SPAC sponsor where the SPAC actually has the potential to move the needle. I know Simon Property Group has a SPAC, but they are a $30 billion company, and will it really move the needle even if they find a great acquisition. Boston Omaha is a $950 million company and if they find what's a great SPAC, the next DraftKings or something to that effect, it could really be a game changer for them.

They also have a stock portfolio, like Berkshire Hathaway does. They have about 100 million or so in their stock portfolio. This one of Buffet's rules to building a successful conglomerate, is being willing to buy minority stakes, not just wholly owned businesses. Which is where things like the Dream Finders stake, the minority investments, the stock portfolio really come into play.

Big Buffet comparison, I'm very bullish on this business long term, they invest in businesses with fantastic economics. In the billboard side of the business, the biggest one, for example, they focus on static billboards, not digital displays, because although there's more revenue potential from digital displays, the economics are fantastic with static billboards, especially in rural areas, because you pretty much just put it there and forget about it and someone pays you rent. There is very little maintenance and ongoing expenses with it.

So great economics to their businesses. I love what they're trying to do, I love that they're the conglomerate model in principle, because it gives them a lot of optionality. For example, right now they see the most potential in their rural broadband business, they could funnel all the profits from all of their different businesses into that one because that's where they see the most potential. I like Boston Omaha, I'm not sure it's going to be the next Berkshire Hathaway in the sense that we're going to see a half-trillion-dollar conglomerate emerged from it, but it definitely has a lot of long-term potential. I could see them, from their current small size, easily multiplying several times over within the next decade.

Brian Withers: That's really interesting, Matt. It seems like they're following Buffett's rule about buying boring companies, too. [laughs]

Frankel: Some of the most boring businesses don't produce boring returns. It's a really important concept for investors to understand.

Withers: It is.

Frankel: If you look at Berkshire's core businesses, they're pretty boring. It doesn't get much more boring than things like auto insurance, utilities, and railroads. [laughs] But when you look at Berkshire's long-term returns, I wouldn't call that boring.