Billionaire Warren Buffett's Latest Stock Buy Is Now on Sale for Less Than He Paid. Is It Still Worth It?

Berkshire Hathaway has significantly increased its stake in Pool Corp (POOL) to over $1 billion, or 9.2% of the company, with substantial purchases made across Q1 and Q2 2025, despite the stock now trading below Berkshire's likely average entry price. Pool Corp, the world's largest pool wholesaler, is experiencing near-term revenue stagnation from new pool installations due to a soft housing market; however, 64% of its revenue is stable and recurring from maintenance and repairs. This makes POOL an attractive long-term value proposition for investors, currently trading at 26x trailing earnings with a 1.73% dividend yield, aligning with Buffett's strategy of buying a solid business at a fair or better price despite short-term market headwinds.

Analysis

Berkshire Hathaway has significantly increased its stake in Pool Corp (POOL), accumulating over $1 billion, representing 9.2% of the company, through substantial purchases across Q3 2024 to Q2 2025. Notably, the current share price of $283.08 is below the lowest possible entry price Berkshire could have paid in any of those quarters, which ranged from $285 to $339.32. This suggests a potential opportunity for new investors to acquire shares at a lower cost than the renowned value investor.

Pool Corp, as the world's largest pool wholesaler, faces near-term headwinds from a soft housing market, which has led to revenue stagnation in new pool installations, accounting for 14% of its business. However, a significant 64% of its revenue is derived from stable, recurring servicing, maintenance, and repair of existing pools. This recurring revenue stream provides a degree of resilience despite the cyclical downturn in new construction.

Despite the near-term challenges, POOL is currently trading at a below-average valuation of 26x trailing earnings and offers a 1.73% dividend yield, aligning with a long-term value investment thesis. The market, however, is expected to keep the share price stagnant until new installations recover, tied to an improvement in the broader housing market. Berkshire's substantial investment underscores a long-term conviction in the company's underlying value.

Key Decisions for Investors

• Consider POOL for long-term value portfolios, especially given its current trading price below Berkshire Hathaway's likely average entry point.
• Monitor housing market indicators and interest rate trends closely, as a recovery in new home construction is a key catalyst for POOL's near-term share price appreciation.
• Evaluate the stability of POOL's 64% recurring revenue stream from maintenance and repairs as a defensive characteristic during periods of soft new installations.
• Investors should be prepared for potential near-term share price stagnation, aligning with the cautious sentiment and the company's reliance on a housing market recovery for significant growth.