Intrawest on a Smooth Ride

Updated from 10:08 a.m. EDT

Intrawest (IDR - Cramer's Take - Stockpickr) shares have been on a tear since early March when an activist hedge fund pressured the ski-resort operator for a company sale to unlock real estate value.

While the stock is definitely a merger play, some long-term investors say it is also worth owning for its strong operating results.

The Canadian company, which is one of North America's largest ski resort operators and a residential real estate developer, announced in early February that it hired Goldman Sachs as an investment banker and was "exploring strategic alternatives" -- language that usually implies a sale of assets or the entire company.

For its part, activist hedge fund Pirate Capital, which has been busily buying shares lately and has amassed a 14.6% stake in the company, urged Intrawest's board of directors in early March to sell the entire company. Pirate said the fair valuation of Intrawest is $45 or more per share.

Intrawest shares recently were trading at $36.69, up 9 cents. On Wednesday, the company reported fiscal third-quarter earnings that beat analyst estimates. Intrawest's earnings fell to $61 million, or $1.23 a share, from $62.7 million, $1.31 a share, a year earlier. Analysts expected a profit of $1.03 a share. A change in depreciation rates significantly boosted depreciation and amortization expenses, which dragged down net income.

The company's earnings before interest, taxes, depreciation and amortization increased 25% to $136.5 million, mostly due to the closing of the first phase of the sale of a majority interest at Mammoth Mountain in California. Operating income from the company's resort and travel operations segment remained flat.

Intrawest gave no update on the sales process in its earnings release nor on its conference call.