Should Investors Lock Arms With Buffett and Dive Into POOL Stock?

Key Points

• As of March 31, Berkshire Hathaway amassed an over $450 million stake in shares of POOL.
• Combining Berkshire data and POOL's price action shows that investors can still get in on the opportunity that Buffett sees in this name.
• Long-term, POOL has multiple key tailwinds that could make the stock a big winner.

Warren Buffett is one of the most successful investors of all time, with many market participants closely watching the Oracle of Omaha's stock picks. While markets focus on flashy artificial intelligence plays, Buffett is staying true to form. Through Berkshire Hathaway NYSE: BRK.B, he’s quietly built a position in a little-discussed name.

That stock is Pool NASDAQ: POOL, the world’s largest wholesale distributor of swimming pool supplies, equipment, and related leisure products.

The firm’s relatively unexciting industry begs the question: what does Buffett see in this consumer discretionary stock? The investment was at least somewhat validated after the company’s latest earnings, as shares spiked afterward.

Below, we’ll detail Berkshire’s investment history, looking to understand whether it still sees value in this name. We’ll examine the company’s latest results and posit why Berkshire invested in the stock. Ultimately, does Pool represent a compelling investment?

Berkshire Data Indicates Opportunity Is Still Available in POOL Shares

According to Berkshire’s 13F SEC filings, the company initiated a position in Pool back in Q3 2024 of around 404,000 shares. During that quarter, Pool’s average closing price was around $342, indicating that Berkshire saw the stock as a good buy near this level.

Berkshire continued purchasing shares in Q4 2024 and Q1 2025. In Q1 2025, Pool’s average price was $336, but it closed as low as $317. 

As shares fell, Berkshire massively increased its stake. At the end of Q1, Berkshire held 1,464,000 shares, a 145% increase versus Q4 2024.

As of the July 28 close, Pool trades at $321. This figure is below the stock’s lowest closing price in Q1, the quarter when Berkshire added around 865,000 shares to its position.

All else equal, this indicates that investors have not missed out on whatever opportunity Berkshire saw in Pool. So, what do Pool’s latest results tell investors about the company, and why was Berkshire comfortable having approximately $466 million invested in the name at the end of Q1?

Financials Hold Steady Through Weak Demand; Buffett Eyes Long-Term Tailwinds 

In Q2, Pool’s sales came in nearly in line at $1.78 billion for a growth rate of just under 1%. However, the stock did manage a moderate beat on adjusted earnings per share (EPS), with the figure coming in at $5.17. This growth rate was approximately 3.8%, compared to expectations of 2.8% growth.

Despite this beat, the company adjusted the midpoint of its full-year EPS guidance down 2.2% to $11.05. Overall, the firm’s results suggest it is doing a better-than-expected job of managing costs, but a weak demand environment is weighing on expectations.

This comes as pool construction is in a downturn, and the company doesn’t expect a rebound in 2025. High interest rates are affecting this. They reduce housing turnover, and people often build pools when they switch homes. Shares spiked as much as 8% on July 24 after the results, but closed up only around 3%.

Known as a long-term investor, Buffett is likely betting on a long-term trend toward swimming pools becoming a larger part of society. Driving this trend is the fact that scientists estimate that average global temperatures will increase by between 0.5 °C (0.9 °F) and nearly 5 °C (9 °F) by the year 2100. 

The company says that new pool construction makes up only about 15% of sales. Still, it's crucial for long-term growth. New pools expand the customer base to which the firm can sell its pool maintenance products.

This allows the company to generate higher recurring sales over time, which drives the majority of its revenue. Pool also notes population migration to warmer Southern U.S. states as a long-term growth driver. Indeed, the last Census found that the South was the fastest-growing region in the country.

Interest Rate and Temperature Changes Would Be Huge for Pool Shares Long-Term

Since 2000, the average monthly effective federal funds rate has been around 2%. Currently, it is at 4.33%. This suggests there could be a significant reversion back to these average levels in the long term. If this happens, pool construction should recover, benefiting demand for the ancillary pool products the company sells and thus shares.

Should the trend of rising temperatures continue, this adds a powerful long-term tailwind to Pool stock. Wall Street analysts see very limited 12-month upside potential in Pool shares. However, as Berkshire is likely betting on, the stock has a significant opportunity to appreciate over an extended time frame if the trends discussed above come to fruition.