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Gold/Mining/Energy : Intrawest Corporation (ITW.TSE) (IDR.NYSE) -- Ignore unavailable to you. Want to Upgrade?

To: SurfForWealth who wrote (38)	4/7/1999 10:24:00 PM
From: thomas gentry	Read Replies (2) \| Respond to of 46

Hello Willie. Should you be upset? Maybe, maybe not. In my case, I look at all this as an inevitable by-product of growth. For me, the question to ask is whether shareholders would be better served by a fiscally-conservative, balance-sheet-driven business model like Vail's (MTN), or by Intrawest's growth-through-constant-acquisition business model. Consider this. A year ago, MTN's balance sheet was touted as the industry's best. MTN's US$180 million capitalization value premium over Intrawest confirmed their supremacy. It's a different story a year later of course. Intrawest's constant drive to build and develop has yielded an entity that now trades at a US$74 million cap value premium over the fiscally prudent MTN. Any way you look at it, this represents an incredible role reversal. Why such a dramatic change? Because that's "what the market says". "The market says" that spreading your mountains over a wide geographic area is a good way to reduce weather risk. "The market says" that aggressive real estate development is a good way to ensure on-going revenues through good times and bad. And "the market says" that Intrawest's globally-integrated resort model has better long-term potential than locally-integrated resorts like Vail. But let's face it, Intrawest's strategy ain't cheap. This latest visit to the "equity well" highlights this. I suggest though that the current price dip will be short lived. Sure, no one likes to see dilution of their share value. But on the other hand, high debt to equity ratios aren't so attractive either. At least for the short term, Intrawest can now boast of a debt/equity ratio that is better than Vail's. Don't expect this to last for long though. There is even more weather risk to mitigate, real estate to develop, and global-integration to be done. And at this time, at this place, nobody does it faster, as efficiently, or as profitably as Intrawest. It's what the market wants. And it's what the market will reward Intrawest's shareholders for. Thomas