The past few days have had more twists and turns than a water slide for Great Wolf Resorts (NASDAQ:WOLF). On Tuesday, the stock soared nearly 10% higher following speculation that the company was on the block. Shares inched lower yesterday, after the company announced that it was not for sale.

This wasn't your garden-variety cyberspace buyout rumor. Hayground Cove Asset Management, a hedge fund that owns a significant stake in Great Wolf, filed with the SEC, indicating that it felt the company would be worth as much as $16 per share in a sale. Hayground's Jason Ader -- a fund manager who had once earned his keep analyzing gaming and lodging industry stocks for Bear Stearns (NYSE:BSC) -- also noted that Great Wolf chairman Bruce Neviaser had approached Ader to discuss a potential sale of the struggling leader in the growing indoor-water-parks industry.

Transforming hotels into stand-alone destinations by anchoring them to huge, enclosed watery playgrounds is a growing trend. Companies like Great Wolf and Kalahari are doing it, and InterContinental's (NYSE:IHG) Holiday Inn chain has been upgrading a few of its properties in that mold. Even regional amusement park operators Six Flags (NYSE:SIX) and Income Investor pick Cedar Fair (NYSE:FUN) have each built an indoor-water-park resort next to a conventional park.

Until recently, the format's expansion was concentrated mostly in the state of Wisconsin. After success elsewhere, indoor water parks are springing up anywhere that the population density will allow for a premium-priced weekend family getaway. States like California and Florida remain virgin soil. What? Who would want an indoor water park in states with perpetual sunshine? Down in Miami, the only water park in the area closed more than a dozen years ago, due to menacing afternoon thunderstorms that would cut operating days short. Indoor parks would make a killing in rich metropolitan areas like that.

Under that tantalizing premise, I recommended Great Wolf to Rule Breakers subscribers last year. Unfortunately, after back-to-back quarterly disappointments, the company stumbled shortly after its IPO. At that point, we advised readers to move on. It would take the company a great deal of time to win back Wall Street's confidence.

It still hasn't gotten to that point. A sale, at the right price, would be a great way for the company to cash out pained investors and reestablish itself with new owners that have yet to let the market down. Suitors would likely include private equity firms and lodging-industry giants. I think that Great Wolf would be a great fit for Stock Advisor selection Disney (NYSE:DIS), too -- as long as it catches up to what the regional players are doing, while also beefing up its timeshare and resort-travel business.

Barring a sale, it will take a few blowout quarters to get Great Wolf shares anywhere near their original IPO price. With analysts expecting a loss this year and meager profitability in 2007, I wouldn't blame Great Wolf if yesterday's press release were actually an invitation to drum up unsolicited offers.

Longtime Fool contributor Rick Munarriz hit four indoor waterpark resorts this summer. None of them was Great Wolf. He does own shares in Disney, Great Wolf, and Cedar Fair . The Fool has a disclosure policy .