The "Boston" half of the CEO tandem that has run Boston Omaha (BOC -1.73%) for nearly a decade is stepping aside. Investors were taken by surprise, sending shares of Boston Omaha down as much as 9% at the open before recovering to down 4% as of 11 a.m. ET.
End of an era
Boston Omaha has always been a bit of an oddity. It is the holding company for four majority-owned businesses in the billboard, broadband, insurance, and asset management industries run by co-CEOs Alex Rozek and Adam Peterson. Rozek lives in Boston and Peterson in Omaha -- the inspiration for the name.
On Friday, Boston Omaha announced Rozek was stepping down to pursue other opportunities, effective immediately, leaving Peterson as sole chairman and CEO.
"After nearly a decade of consistent growth and building significant businesses across multiple categories, I feel this is a good point to move on to my next new venture," Rozek said in a statement. "I will work with the management team and the board so that there is a smooth transition, and I will continue to be an enduring fan of Boston Omaha and its businesses and investments."
Is Boston Omaha stock a buy?
The investment thesis behind Boston Omaha involves the company investing the cash generated by its core businesses in areas able to deliver market-beating returns. But the thesis hasn't worked in some time: Boston Omaha shares have lost nearly 65% of their value in the last three years and have badly underperformed the S&P 500.
Investors don't like unexpected change, and are understandably shaken by the departure. But there is no sign of foul play or a difficult separation. Boston Omaha will spend about $19 million to buy out Rozek's share of the business, but the now former-CEO will remain the company's board designee at investment Sky Harbour Group.
The co-CEO model is rare because it is complicated. Even two like-minded people are likely not going to see eye to eye on all issues. There is bound to be some friction or second guessing, and Boston Omaha's long-term success growing book value is a credit to Peterson and Rozek's ability to work together for as long as they have.
For now, the future rests in Peterson's hands. He has traditionally been seen as the more conservative of the two, more likely to focus on the businesses in hand than branching out into something new.
Boston Omaha's annual letter to shareholders will likely be out in the coming days. Investors should read closely for clues about where Peterson sees the company going from here.
