Ball Corp is a high-quality business with strong governance and recurring maintenance revenue, suitable for long-term accumulation despite cyclical headwinds in new pool construction.

One of these names is "Paul Corp," which I can talk about shortly. I know it's Michael's favorite stock. So, I can't wait for him to yell at me. Ballcorp needs to switch from digging swimming pools to digging graves. Same equipment, but smaller holes.

Jonathan, let's talk about one of the worst stocks on Earth. Ball Corp. Over the past two years, we know that residential construction is in a disastrous state. In the past two years, the average number of new swimming pools built in the United States has been around 60,000, the lowest level in more than a decade.

I think, fortunately or whatever, Bullcorp is the largest wholesale distributor. Therefore, it is a low- capital-intensity business. They are just a distributor. They do not manufacture the product.

But oh my God, this stock keeps going down and down and down. It is heading towards a new low.

What does distributor mean? So, independent companies that build swimming pools buy their equipment from Pool Corp., such as chemicals, filters, and all that stuff. So, construction and maintenance.

Yes. Maintenance is mostly required. But yes. Good. You might think that if you build a swimming pool, you won't fill it with cement after two years. Okay . You might think that the base of installed swimming pools has grown significantly only in the last ten years.

This is a regular, ongoing income . You need to maintain your pool throughout the summer. Every summer, you can't take a break for a year . It will turn into a pool of algae. Okay .

But that doesn't seem to matter. So, what does the market value the stock on? Only new swimming pools are being built. Is this the only thing they care about ?

Well, revenues didn't really grow because during the Covid era they grew by 27% annually. So there was a lot of advance demand and now everyone got a pool all at once . Oh, everyone got a pool all at once.

Everything is now starting to return to normal, and that's why you see the stock dropping from 500 or so to $167 per share. Now you are buying it for 15 times the profit and it is almost cheap enough.

Is this the kind of thing where you say, "Well, obviously I was wrong about the stock. It's gone down too much, but maybe there's a chance it could be saved by some white knight."

I mean, I'd rather that didn't happen because I think it could be very bad for you. I mean, let me give you a brief overview. We wrote about this in 2009. We published an issue in which we discussed that it was time to buy consumer-oriented stocks.

So, we had "Paul Corp" for $20. We ate at the Marriott. We discussed a few other names. We didn't look into the matter again until this summer. wow . So, over the past two years, we have been feeling tempted.

We really wanted to write about it, but it just didn't get cheap enough. But when we wrote about it this summer, I think it was a multiple of 17 or maybe 18. We said, "Wow, it could get a little cheaper."

And that's what happened; it's a really cheap stock.

Now, show the chart of annual new swimming pool constructions in the United States . Has this hit rock bottom, or is there really no way to know? It's very sensitive to interest rates, is n't it?

People are borrowing money and using a mortgage line of credit to dig a new swimming pool. So we don't even know if we've seen the worst. We don't know . We have seen the worst, but there are indications that it is a very well-run company.

The board of directors is fantastic. If you look at them, they all have backgrounds in the field of distribution. This is a very low-leverage company, and it does not have a controlling shareholder, and as Michael pointed out, a private equity firm could certainly come along and try to acquire it.

So, I mean, that's not the investment hypothesis. As a long- term investor, I prefer, you know , this is a great business. As I said, I don't want to say it's like a pension income, but it's close .

There is a lot of maintenance revenue there. I would prefer to be able to own it and accumulate its returns over time.