I first valued BOC when I was researching DFH.
I appreciated the fact that they captured most of the upside of DFH having been invested in it pre-IPO. Another positive indicator of management quality is that they are currently invested heavily in SKYH.
BOM is a holding company similar to Berkshire and it operates with a similar philosophy. Concentrated positions in high quality businesses. Comprehensive annual letters to shareholders. Yet it differs in a few ways such as having a compensation committee, owning some low growth businesses and a seemingly poorly operated insurance segment.
Some figures from Value Line
Income statement
| 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
| Revenue per share | .63 | .91 | 1.75 | 1.68 | 1.92 | 2.73 | 3.07 |
| Earnings per share | -.60 | -.46 | -.07 | .02 | 1.82 | -.3 | -.23 |
| Shares outstanding ($M) | 14.36 | 22.09 | 23.62 | 27.23 | 29.7 | 29.71 | 31.31 |
Valueline provided a Book value of BOC of 709.11M. Meaning that the price to book was about 0.63.
I quickly valued the company using a “sum of the parts” approach, assuming each business segment was sold at market price on a EBITDA multiple, multiples are industry averages based on EBITDA, and conservative.
My valuation:
| EBITDA (from 2023 annual letter ) | Multiple | Value in Millions (balance sheet items from 2023 10-K) | |
| Cash and marketable securities and treasury securities | $95.9 | ||
| Investment in SKYH | $120.50 | ||
| Warrants in SKYH | $14 | ||
| Other Investments | $59.8 | ||
| Billboards | $16.00 | 16.5 | $264.00 |
| Broadband | $2.90 | 11 | $31.90 |
| Insurance | $1.80 | 10 | $18.00 |
| Debt | -$27.3 | ||
| Total Value | $577 | ||
| Shares Outstanding | 33 | ||
| Share Value | $17.48 |
As of 12/5/24 it was trading at 14.86, and so slightly undervalued. (at 85% of intrinsic value)
While the stock is undervalued, the majority of their positions are in slow growth but protected industries like billboards and broadband. The broadband and insurance segments are still not currently driving net income to the firm. And this has driven overall net negative earnings in recent few years. I also think that this recent trend of negative income and share dilution could mean that it will burn through its 15% margin of safety.
If and when these investment play out, I think the IRR will be fairly low, which doesn’t endear the management much to me. I think the biggest upside from this stock will be driven from the SKYH investment, and I would rather own that directly. I also generally have stronger conviction plays than this, so I will stay away.
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