Steamboat Ski Area owner stock hits record high
Speculation continues that Steamboat Ski Area is on the market
April 1, 2017
Steamboat Springs — Stock for Intrawest, the parent company of Steamboat Ski and Resort Corp., closed at a record high Friday.
Local financial advisers think the increase signals that stockholders believe Intrawest's assets and ski areas are on the market.
"The stock is telling us that assets will probably be sold," said Dan Foley, founder of Sleeping Giant Financial.
Intrawest stock closed Friday at $25.01, about three times what it was selling for a year ago. Since January, it has risen about 47 percent.
"To me, it seems like the run up is overdone," said David Shepard, president of Callahan Capital, who routinely listens to Intrawest's quarterly reports. "From a valuation standpoint, the stock price seems expensive to me, unless they get bought out."
The rise in the stock price could be caused by speculation that assets such as the Steamboat Ski Area are for sale.
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In January, Reuters reported Intrawest was in the initial stages of reaching out to potential buyers, including buyout firms.
Intrawest executives have not addressed the rumors.
"We really don't comment on market speculation or rumors, so sorry, but we can't do that," CEO Tom Marano said in February.
Intrawest is owned by Fortress Investment Group.
In February, Fortress was acquired by SoftBank Group Corp., a Japanese telecommunications, internet and solar energy giant.
SoftBank's Masayoshi Son has said acquiring Fortress would help his company's strategy of investing in leading technologies, including artificial intelligence and internet-related technology.
It is unclear where operating Intrawest ski areas — which include two in Colorado and four in the eastern United States — fits into that strategy.
"That would lead me to believe this is one of the assets they would be willing to sell," Shepard said.
There are other signs Intrawest is positioning itself to get the highest price for its assets.
In January 2016, Intrawest announced it was buying back $50 million of its own stock.
"It's probably a good sign when a company buys back a bunch of their stock," Edward Jones Financial advisor Chris Puckett said.
After previous losses, Intrawest projects it will make between $129 million and $139 million this year.
"They're really trying to clean up their balance sheet so they can sell it for a good price," Shepard said.
In February, Intrawest announced it would spend $46 million and $50 million on capital projects, but nothing specific was mentioned for Steamboat.
With Steamboat's gondola turning 30 years old, residents have been anticipating a replacement of the gondola and, potentially, a redevelopment of Gondola Square.
Instead, Ski Corp. announced in February it was going the cheaper route and refurbishing the existing gondola.
It possibly did not make sense for Intrawest to spend the additional dollars if its assets are being shopped around.
"A gondola is a long-term investment" Shepard said. "You want to clean up the balance sheet and not spend on long-term investments."
Now-defunct American Skiing Co. sold the ski area to Intrawest in 2006 for $265 million.
David Baldinger Jr., a Steamboat Sotheby's International Realty agent who follows the ski industry closely, is hopeful any future owner of the ski area will not be burdened with debt and have ability to fund major improvements.
"Well capitalized with long-term vision and a business plan," Baldinger said. "It's pretty simple. That's an ideal owner at all times."