Realized we are looking at the same stocks. I have position in both Pool and Copart as well. Do you deem Heritage Supply (who is backed by Home Depot balance sheet) as a credible threat? Currently, Pool benefits from being the dominant leader. Will the competitive landscape become a case of 1A and 1B?
Small world :), so Pool controls roughly 40% of the US market. Heritage, sits at roughly 8 to 10% today. That leaves around 50% of the market still independently owned. how much of that remaining 50% is actually for sale.
A meaningful share of independent pool distributors are family owned, multi-generational businesses with owners who aren't interested in selling at any price, or who would only sell to Pool itself given the relationships built over decades. so in our case, Home Depot big pockets cant solve that problem. you simply cant buy a business whose owner wont sell.
So the wall Heritage eventually hits is available inventory wall. At some point the willing sellers in that 50% are exhausted, and whatever's left is either too small to matter, too entangled in succession plans, or simply not for sale. and its interesting to think the acquisition has a real ceiling regardless of whos funding it.
Once that ceiling is hit, the competition becomes genuinely operational, branch density, SKU breadth, delivery reliability, contractor relationships built over decades. That's the terrain where Pool's 40 year head start matters most, and it's much harder to buy your way into than market share.
My honest view on the 1A/1B framing, it's plausible, but it depends entirely on how much of that remaining 50% is genuinely acquirable. If it's most of it, Heritage could plausibly reach 25 to 30% over time and the duopoly framing holds. If a large chunk of it is permanently unavailable, family businesses that will never sell, or that will only sell to Pool, Heritage's ceiling could be considerably lower, and Pool's dominant position holds for longer. And lets not forget the U.S. antitrust laws, If Heritage attempts to buy a large regional distributor that pushes Heritage's own market share toward 20%+, the FTC will likely block the acquisition to protect remaining market competition.
Realized we are looking at the same stocks. I have position in both Pool and Copart as well. Do you deem Heritage Supply (who is backed by Home Depot balance sheet) as a credible threat? Currently, Pool benefits from being the dominant leader. Will the competitive landscape become a case of 1A and 1B?
Small world :), so Pool controls roughly 40% of the US market. Heritage, sits at roughly 8 to 10% today. That leaves around 50% of the market still independently owned. how much of that remaining 50% is actually for sale.
A meaningful share of independent pool distributors are family owned, multi-generational businesses with owners who aren't interested in selling at any price, or who would only sell to Pool itself given the relationships built over decades. so in our case, Home Depot big pockets cant solve that problem. you simply cant buy a business whose owner wont sell.
So the wall Heritage eventually hits is available inventory wall. At some point the willing sellers in that 50% are exhausted, and whatever's left is either too small to matter, too entangled in succession plans, or simply not for sale. and its interesting to think the acquisition has a real ceiling regardless of whos funding it.
Once that ceiling is hit, the competition becomes genuinely operational, branch density, SKU breadth, delivery reliability, contractor relationships built over decades. That's the terrain where Pool's 40 year head start matters most, and it's much harder to buy your way into than market share.
My honest view on the 1A/1B framing, it's plausible, but it depends entirely on how much of that remaining 50% is genuinely acquirable. If it's most of it, Heritage could plausibly reach 25 to 30% over time and the duopoly framing holds. If a large chunk of it is permanently unavailable, family businesses that will never sell, or that will only sell to Pool, Heritage's ceiling could be considerably lower, and Pool's dominant position holds for longer. And lets not forget the U.S. antitrust laws, If Heritage attempts to buy a large regional distributor that pushes Heritage's own market share toward 20%+, the FTC will likely block the acquisition to protect remaining market competition.