Why Buffett's Pool Corp Investment Hasn't Paid Off (Yet)

A Stunning Underperformance Story

When Berkshire Hathaway took a stake in Pool Corporation (NASDAQ: POOL) roughly a year ago, few questioned the Oracle of Omaha’s judgment. Yet what followed has been a painful lesson in market timing and cyclical business exposure.

The numbers tell a sobering story. Pool shares have collapsed from approximately $400 to just $245 today—a gut-wrenching 39% decline that has devastated anyone who followed Buffett into the position. But here’s what makes this truly sting: while Pool shareholders were nursing losses, the S&P 500 marched upward by 14%. That’s a relative underperformance of nearly 50 percentage points.

The Longer View: It Only Gets Worse

Zoom out to three years, and Pool’s absolute performance looks marginally better on paper—down only 26%. But don’t let that fool you. The S&P 500 has surged roughly 75% during the same window. Five-year investors see a similar story: Pool is down 25% while the broader market has nearly doubled. That’s an opportunity cost of 125 percentage points for patient capital.

For those unfortunate enough to have bought near Pool’s late-2021 peak—when pandemic-driven pool installation demand was at its height—the situation is catastrophic. Even including reinvested dividends, which add back a meager 1.75% over five years, doesn’t materially change the grim arithmetic.

What Went Wrong? The Housing Market Connection

The culprit is straightforward: the real estate collapse. New pool installations drive significant portions of Pool’s revenues, particularly when homes are newly constructed. Renovation and maintenance purchases spike when homes are being prepared for sale. With the housing market in a pronounced downturn, demand for pool equipment has naturally cratered alongside it.

The California market exemplifies this dynamic—with pool installation costs ranging substantially depending on the project scope and location, fewer homeowners are pulling the trigger on these discretionary capital expenditures during a tight credit environment.

The Hard Lesson for Buy-and-Hold Investors

This situation exposes a critical myth: there’s no such thing as a truly passive “set and forget” investment, even for legendary investors. Berkshire Hathaway’s decision to hold onto Pool despite its deteriorating fundamentals reflects faith in eventual recovery, but that recovery timeline remains unclear.

For ordinary investors, the takeaway is humbling. Quarterly portfolio reviews aren’t optional luxuries—they’re essential hygiene. Market conditions change. Business cycles turn. The real estate recovery that Pool desperately needs may arrive, but asking investors to sit through a 125-percentage-point opportunity cost while waiting requires genuine conviction.

Buffett’s patience may ultimately be vindicated when housing stabilizes. But for now, Pool stands as a reminder that even the world’s best investors occasionally miss on timing and that discipline in capital allocation matters just as much as long-term conviction.