Would Warren Buffett File An Equity Offering At 5pm On A Friday?

Our previous article cautioned about BOSTON OMAHA Corp (NASDAQ:BOMN) whose stock had skyrocketed we believe because of investors’ mistaken belief the company was related to Warren Buffett.  BOMN has no connection to Warren Buffett and we believe the stock remains massively overvalued considering its book value is only $10.42 per share and the company is losing money.

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In the month since our original article, the stock has fallen 30% and we think it will fall even further considering the news that came out late last Friday.  The news we are referring to was an SEC filing by BOMN for a $50 million at the money equity offering and a $200 million mixed shelf offering.  BOMN has a market cap of only $290 million so these offerings could be very dilutive and overwhelm the market with a lot of newly issued shares.

With the stock trading at approximately 2x book value (a multiple much higher than many other comparable companies), we think the stock is overvalued and if we were management we’d be trying to sell as much stock as possible at these prices.

We are concerned about the stock’s (over) valuation, but we are also greatly concerned about management’s credibility considering their decision to file the offering at 5pm on a Friday afternoon.  Many experienced investors believe companies that “dump” information late on a Friday are doing so in attempt to minimize the number of shareholders who will see the information.  We don’t know if this was BOMN’s intention, but whatever their intention was, we believe their actions reflects poorly on them and how open and transparent they are with their investors and how knowledgeable BOMN is about the capital markets.

As we’ve mentioned, Warren Buffett (one of the all time greatest investors) is not involved with BOMN.  In fact, we doubt very much he’d be buying a stock like this at this valuation and we doubt very much he’d approve of filing an equity offering at 5pm on Friday.