Great Wolf Resorts, Inc. (NDAQ:WOLF) shares moved up $0.18, or 1.36%, to $13.37 today after Jason Ader demanded that the company maximize shareholder value by immediately putting itself up for sale in a Schedule 13D/A filing with the SEC. The 7.78% shareholder continues to believe that management is simply unable to unlock shareholder on its own and expressed its disappointment with management's refusal to explore a possible sale. This comes after they made similar recommendations to the company back in August.

Why should the company be put up for sale? According to Mr. Ader, the company's management is simply unable to effectively capitalize on a growing market that is attracting more and more private equity and investment interest. While WOLF once dominated the indoor water parks market, there are now new, better capitalized and savvy developers. Mr. Ader noted that: the company just took large, non-deductible write-offs for goodwill impairment at two of their major resorts, development and construction costs are increasing (together with competition), and the company's prospects as a stand-alone aren't materially brighter today than they were last year. Meanwhile, the market continues to ignore and undervalue the company despite four analyst buys with a $16.50 target. According to Mr. Ader, "I continue to believe there is intrinsic value in the business, but I don't have confidence that current management or the current board can - on their own - unlock this value for shareholders.  I find it irresponsible that Mr. Emery simply refused to return any follow-up calls from the UBS bankers - and has not begun any alternative sale process. Now is not the time to continue to wait for performance to bail you out.  As I said last August, it's not happening."

Mr. Ader attached two charts to his filing to illustrate the company's failure:

Here it is very clear that WOLF started out by outperforming its peer group, but quickly deteriorated to its current levels. And a comparison with the overall market is no better:


Clearly, WOLFs shares have been underperforming both their peers and overall market averages. In the end, Mr. Ader believes that other large shareholders share his sentiment, and that there would be significant interest within the private equity community - or among the strategic players - in a transaction involving WOLF. Consequently, he is again demanding that the company at least hire an investment banker to explore possible strategic alternatives. If the company refuses, it will be interesting to see if Ader would consider going as far as a proxy fight to unlock value. Alternatively, we could see additional institutional shareholders voice their support for these ideas. Either way, if the company agrees, we could see significant share appreciation. This makes WOLF a stock worth keeping an eye on!

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