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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Berkshire Hathaway's (NYSE:BRK) Warren Buffet released his annual letter to shareholders yesterday, announcing a $16.9 billion gain in net worth. Many investors consider the Oracle of Omaha's annual letter to shareholders required reading, as Buffet offers his views on the economy and general market outlook. What does Buffet think about the future of our economy and stock market prospects? Let's take a look...

On the economy, Buffet commented:

As our U.S. trade problems worsen, the probability that the dollar will weaken over time continues to be high. I fervently believe in real trade – the more the better for both us and the world. We had about $1.44 trillion of this honest-to-God trade in 2006. But the U.S. also had $.76 trillion of pseudo-trade last year – imports for which we exchanged no goods or services. (Ponder, for a moment, how commentators would describe the situation if our imports were $.76 trillion – a full 6% of GDP – and we had no exports.) Making these purchases that weren’t reciprocated by sales, the U.S. necessarily transferred ownership of its assets or IOUs to the rest of the world. Like a very wealthy but self-indulgent family, we peeled off a bit of what we owned in order to consume more than we produced.

The U.S. can do a lot of this because we are an extraordinarily rich country that has behaved responsibly in the past. The world is therefore willing to accept our bonds, real estate, stocks and businesses. And we have a vast store of these to hand over.

These transfers will have consequences, however. Already the prediction I made last year about one fall-out from our spending binge has come true: The “investment income” account of our country – positive in every previous year since 1915 – turned negative in 2006. Foreigners now earn more on their U.S. investments than we do on our investments abroad. In effect, we’ve used up our bank account and turned to our credit card. And, like everyone who gets in hock, the U.S. will now experience “reverse compounding” as we pay ever-increasing amounts of interest on interest.

I want to emphasize that even though our course is unwise, Americans will live better ten or twenty years from now than they do today. Per-capita wealth will increase. But our citizens will also be forced every year to ship a significant portion of their current production abroad merely to service the cost of our huge debtor position. It won’t be pleasant to work part of each day to pay for the over-consumption of your ancestors. I believe that at some point in the future U.S. workers and voters will find this annual “tribute” so onerous that there will be a severe political backlash. How that will play out in markets is impossible to predict – but to expect a “soft landing” seems like wishful thinking.

On executive compensation, he noted:

You’ve read loads about CEOs who have received astronomical compensation for mediocre results. Much less well-advertised is the fact that America’s CEOs also generally live the good life. Many, it should be emphasized, are exceptionally able, and almost all work far more than 40 hours a week. But they are usually treated like royalty in the process. (And we’re certainly going to keep it that way at Berkshire. Though Charlie still favors sackcloth and ashes, I prefer to be spoiled rotten. Berkshire owns The Pampered Chef; our wonderful office group has made me The Pampered Chief.)

CEO perks at one company are quickly copied elsewhere. “All the other kids have one” may seem a thought too juvenile to use as a rationale in the boardroom. But consultants employ precisely this argument, phrased more elegantly of course, when they make recommendations to comp committees.

Irrational and excessive comp practices will not be materially changed by disclosure or by “independent” comp committee members. Indeed, I think it’s likely that the reason I was rejected for service on so many comp committees was that I was regarded as too independent. Compensation reform will only occur if the largest institutional shareholders – it would only take a few – demand a fresh look at the whole system. The consultants’ present drill of deftly selecting “peer” companies to compare with their clients will only perpetuate present excesses.

Clearly, Buffet offers some valuable insight here that can be applied to far more than just Berkshire Hathaway. I encourage you to read his full letter here, as it contains far more information on different sectors, governance, advice on valuing securities, different ancedotes, and much more. It is definitely required reading for all long-term value investors.

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Hilton Hotels (NYSE:HLT) has agreed to sell the Scandic Hotel chain to European private equity group EQT for about $1.1 billion as it seeks to reduce debt. Hilton is targeting an investment grade credit rating after taking on debt to buy Hilton International in February 2006 in a $6 billion deal. Scandic was part of the Hilton International deal and was put up for sale in August. Hilton expects the sale of Scandic, the largest hotel operator in the Nordic region with 132 hotels, to reduce 2007 recurring earnings by $0.10 a share.

Britain's EMI Group (NYSE:EMPIY) rejected a $4.1 billion cash takeover proposal from Warner Music Group, saying the price was inadequate and not in the best interests of its shareholders. The world's third-largest music company held a board meeting on Friday after getting a non-binding proposal from Warner which indicated it might be prepared to make a bid at 260 pence per share. EMI has also been in talks with private equity firms including One Equity Partners, a unit of JPMorgan Chase, as potential alternatives.

Gen-Probe (NDAQ:GPRO) has won U.S. approval to sell its Procleix blood test to detect the West Nile virus, a Food and Drug Administration spokeswoman said Friday. The test is designed to screen donated blood, tissue and organs for the virus.

Bristol West Holdings (NYSE:BRW) shares jumped 36% Friday after the company agreed to be acquired by Zurich Financial for $712 million in cash, or $22.50 a share. That's a 39% premium to Bristol's close on Thursday.

Shares of Dendrite International (NDAQ:DRTE) jumped 21% after Cegedim S.A. agreed to acquire the company for $16 a share in cash. The deal values Bedminster, N.J.-based Dendrite, a provider of sales and marketing products and services to the pharmaceutical industry, at roughly $751 million.

Methode Electronics (NDAQ:METH) shares rose 12% after the company said Q3 sales rose to $105.4 million from $95.1 million a year earlier. Quarterly net income for the global maker of electronic components and subsystem devices was $4.7 million, or $0.13 a share, compared with $2.8 million, or $0.08 a share, a year earlier.

Shares of Palm Inc. (NDAQ:PALM) jumped 11% amid a fresh media reports that the maker of handheld wireless devices might be acquired by Nokia Corp.

Scottish Re Group Ltd. (NYSE:SCT) shares rose 11% after the company said the company's shareholders approved proposals relating to an investment of $300 million each by MassMutual Capital Partners LLC and an affiliate of Cerberus Capital Management L.P.

Advocat (NDAQ:AVCA) shares tumbled 28% Friday after the Brentwood, Tenn.-based health care services provider reported Q4 net earnings of $2.28 million, or $0.37 a share, down from $12.9 million, or $1.99 a share, in the year-ago period. Revenue rose 3.8% to $55.8 million from $53.7 million. The company expects 2007 results in a range of a loss of $0.08 a share to a profit of a penny a share on revenue of $221 million to $228 million.

AMN Healthcare Services Inc.'s (NYSE:AHS) shares fell 15% after the company reported that their Q4 net income jumped 44% to $10 million, or $0.29 a share, from $6.98 million, or $0.21 a share, a year earlier. The San Diego company's revenue grew to $283.5 million from $221.4 million.

Atlantic Tele-Network (NDAQ:ATNI) shares fell 11% after the company said it doesn't expect organic growth in earnings for 2007 to be as strong as it was in 2006 although it does expect to grow consolidated profits. The company posted earnings of $23.2 million, or $1.70 a share, for the year, on revenue of $155.4 million.

Credence Systems Corp. (NDAQ:CMOS) shares tumbled 25% after the company reported a Q1 net loss of $11,000, or breakeven on a per-share basis, compared with a net loss of $4.05 million, or $0.04 a share, during the year-ago period. The Milpitas, Calif.-based semiconductor-testing-equipment company posted revenue of $118.8 million versus $121.8 million.

Delta Air Lines Inc. (OTC:DARLQ) shares lost 6.9% after the company said its loss in January was $109 million, compared with a $300 million loss in January 2006. Delta's consolidated passenger unit revenue rose 3.7% in January over the same month in 2006. The Atlanta-based airline said its monthly operating expenses "remained essentially flat" despite a capacity increase of 2.9%. Delta is currently in Chapter 11 reorganization and is expected to exit bankruptcy in the coming months.

Gulf Island Fabrication (NDAQ:GIFI) shares tumbled 25% after the Houma, La.-based maker of offshore drilling and production platforms reported Q4 net earnings of $3.73 million, or $0.26 a share, up from $2.7 million, or $0.22 a share, in the year ago period. Revenue rose to $76 million from $41.4 million.

Leapfrog Enterprises (NYSE:LF) shares sank 8.4% after the company reported a Q4 loss of $46.0 million, or $0.73 a share, on sales of $182.8 million. In the same period a year earlier, the educational products developer earned $14.4 million, or $0.23 a share, on sales of $248 million.

OmniVision Technologies Inc. (NDAQ:OVTI) shares sank 7.2% after the company reported Q3 net earnings of $4.13 million, or $0.07 a share, down from $29.6 million, or $0.53 a share, during the year-ago period.