The past few days have had more twists and turns than a water slide for Great Wolf Resorts.
On Tuesday, the stock soared nearly 10% higher following speculation that the company was on the block. Shares inched lower yesterday, after the company announced that it was not for sale.
This wasn't your garden-variety cyberspace buyout rumor. Hayground Cove Asset Management, a hedge fund that owns a significant stake in Great Wolf, filed with the SEC, indicating that it felt the company would be worth as much as $16 per share in a sale. Hayground's Jason Ader -- a fund manager who had once earned his keep analyzing gaming and lodging industry stocks for Bear Stearns -- also noted that Great Wolf chairman Bruce Neviaser had approached Ader to discuss a potential sale of the struggling leader in the growing indoor-water-parks
Transforming hotels into stand-alone destinations by anchoring them to huge, enclosed watery playgrounds is a growing trend. Companies like Great Wolf and Kalahari are doing it, and InterContinental's Holiday Inn chain has been upgrading a few of its properties in that mold. Even regional amusement park operators Six Flags and Income Investor
pick Cedar Fair have each built an indoor-water-park resort next to a conventional park......
A sale, at the right price, would be a great way for the company to cash out pained investors and reestablish itself with new owners that have yet to let the market down. Suitors would likely include private equity firms and lodging-industry giants. I think that Great Wolf would be a great fit for Stock Advisor selection Disney, too -- as long as it catches up to what the regional players are doing, while also beefing up its timeshare and resort-travel business.