May. 16 at 5:35 PM
$POOL So Abel and Tec Wechsler sold Pool. Where does Pool go after Berkshire's exit? Well, if Warsh cuts rates, POOL could start to climb. But if high WTI leads to higher Fed rates, higher inflation, demand destruction for oil & other goods, and an eventual economic slowdown, there's more room for Pool to fall at 12.5x Ebitda. To go in, I would look for 9-10x Ebitda for a cyclical story like Pool. Just like during 911, Covid-19 fooled a lot of people: home renovations, furnishings & outdoor enhancements like pools, hot tubs, spas, decks & related landscaping work are all one-time, discretionary spending items enabled by lower rates & expansionary fiscal policy. No such environment exists today or is likely to take hold in the near future. This is definitely not a secular growth story Berkshire and Buffett were known to embrace to make it a long-term buy & hold.
