Private equity shop Fortress’s $1.8-billion deal for Intrawest is interesting on a number of levels. It can be seen as a play on a debt-loaded resort operator that has significant earnings leverage to the 2010 Whistler Olympics.
It can also, however, be seen as further validation of activist-based trading strategies. Pirate Capital, which owns 16.5% of Intrawest, pushed hard for Intrawest to make a company sale, and it is now up more than double since January of 2003. If you had simply piggy-backed Pirate into the shares you would have done very well indeed.
Mind you, naively following activist investors into every stock is not a smart strategy. Just look at the pain Penn Capital is feeling over its big Imax holding. The stock lost 41 percent yesterday, which hurts Penn which had been wangling for a buyout.