Why Buffett Keeps Buying Pool Corp – A Hidden Investment Gem?

1. Buffett’s Confidence: Berkshire Hathaway keeps increasing its stake in Pool Corp.

2. Market Leader: Pool Corp dominates the pool supply and outdoor living industry.

3. Strong Financials: Consistent revenue, high margins, and solid cash flow.

4. Strategic Growth: Expanding sales centers, technology, and acquisitions.

5. Resilient Business: Recurring revenue and a strong moat make it a Buffett-style investment.

Introduction: Warren Buffett's Strategic Moves

Berkshire Hathaway's latest 13F filing, released on February 14, 2025, once again caught investors’ attention. While many focus on the tech giants or financials in Buffett’s portfolio, a less flashy but equally compelling position continues to grow—Pool Corporation (POOL). The fact that Berkshire has been adding to its stake signals a strong belief in the company’s long-term potential. Given Buffett’s reputation for investing in stable businesses with strong competitive advantages, Pool Corp’s presence in his portfolio is worth a closer look.

Understanding Pool Corporation

Pool Corporation is the largest distributor of swimming pool supplies and outdoor living products in the world. With about 445 sales centers across North America, Europe, and Australia, it dominates this niche market. The company provides everything needed for pool construction, maintenance, and renovation—products that aren’t just one-time purchases but part of an ongoing demand cycle. Pool Corp's extensive distribution network gives it a strong competitive edge over smaller players. Beyond pools, the company is expanding into related outdoor products, broadening its market and increasing its long-term growth potential.

Financial Performance and Market Position

Pool Corp has shown steady financial performance, even during economic downturns. In Q3 2024, the company reported net sales of $1.4 billion, a gross margin of 29.1%, and an operating income of $176.4 million. These figures highlight the company’s ability to stay profitable despite changes in consumer spending and broader market conditions. As of February 18, 2025, POOL stock trades at $344.20, reflecting solid investor confidence. While some may worry about economic slowdowns affecting home improvement spending, Pool Corp’s mix of essential maintenance products and growing service revenue makes it a reliable, cash-generating investment—just the kind Buffett prefers.

Strategic Initiatives and Growth Prospects

Pool Corp is not standing still—it continues to evolve and expand. The company has been investing in technology, launching its Pool360 platform to streamline ordering, inventory tracking, and customer engagement. This software helps pool service professionals run their businesses more efficiently while keeping them closely tied to Pool Corp’s distribution network. Additionally, the company is adding more sales centers, strengthening its distribution advantage and reinforcing its role as the go-to supplier in the industry. With a mix of organic growth and acquisitions, Pool Corp is setting itself up for long-term success.

Buffett's Investment Rationale

Why does Warren Buffett keep adding to his Pool Corp position? The answer lies in the company’s strong competitive edge, steady cash flow, and solid returns on investment. Buffett favors businesses with pricing power and recurring revenue streams—two key strengths of Pool Corp. The company benefits from the ongoing need for pool maintenance, which remains steady even when the economy slows. Additionally, its wide distribution network makes it difficult for competitors to gain market share. These factors make Pool Corp a classic Buffett investment: a predictable, profitable business with long-term durability.

Industry Trends and Future Outlook

The pool and outdoor living market is changing, and Pool Corp is well-positioned to take advantage of new trends. Demand for outdoor upgrades surged during the pandemic and remains strong as homeowners continue to invest in their outdoor spaces. Climate changes are also increasing demand for pools, especially in warmer regions. Meanwhile, advancements in automation and water treatment are creating new opportunities for growth. Pool Corp’s ability to integrate these innovations into its business model ensures that it stays ahead of the competition. While economic downturns may slow new pool construction, the ongoing maintenance needs of existing pools provide a steady revenue base for the future.

Conclusion: What This Means for Investors

Pool Corp’s continued success reinforces its position as a dominant player in a stable, growing market. Warren Buffett’s increasing stake in the company highlights its reliability and long-term investment potential. While the stock may not grab headlines like high-growth tech companies, its steady cash flow, strong competitive moat, and strategic growth initiatives make it a compelling choice for patient investors. Pool Corp is a great example of how Buffett’s investment philosophy—focusing on durable businesses with predictable earnings—continues to outperform over time. If you found this analysis useful, feel free to share it with your friends and colleagues. If you have any questions or insights, we’d love to hear from you—just send us an email!

Happy investing!
Josh

The information is provided for educational purposes only and does not constitute financial advice or recommendation and should not be considered as such. Do your own research.