You won't find too many bears inside Six Flags (NYSE:SIX) this season.

Few of the parks have live animal exhibits. And coasters with bear names -- like Great Bear in Hersheypark or a pair of Grizzly coasters at Cedar Fair (NYSE:FUN) parks -- are far away from the company's portfolio of regional amusement parks.

OK, so you have a few Panda Express eateries. And, yes, you can see brown bears at the safari adjacent to Six Flags Great Adventure in New Jersey. However, if you really want to see Six Flags bears in action, your best bet is to check the ticker tape.

Then, check out the signs indicating that these investing bears are scampering away from a tub of honey, after being spooked by their own shaggy shadows.

There are plenty of folks betting against Six Flags at the moment. As of May 15, there were 26.6 million shares sold short. For those keeping ironic score at home, that's more than the 24.8 million park guests that the company entertained last year.

Six Flags has one of the highest short interest ratios on the New York Stock Exchange. It would take 15 days of average daily trading volume for the shorts to close out their positions.

Don't fear the reapers
Neophyte investors may be spooked by companies with large short interest ratios. They fear that the masses are right, and that they're not in on the joke.

I don't see it that way. As long as you understand why so many people are bearish -- and can figure out the bullish catalysts that will smoke them out -- it can be a lucrative investment as the shares are bid up when the bears buy to cover their short positions.

Let's spell out the reasons to be pessimistic:

  • Six Flags hasn't turned a profit since 1998.
  • Attendance was off by 13% last year (or down 12% if you exclude the shuttered New Orleans park).
  • Loss from continuing operations nearly doubled to $207 million last year.
  • Burdensome debt creates a high hurdle of interest expense.
  • New executives thrilled investors at first, but the stock has shed 48% of its value since peaking in February 2006. 

Got it? Good. Now let's play Yogi, to show the world that we're smarter than the average bear.

Raging Bull is the name of a Six Flags coaster
There are plenty of reasons to like Six Flags as we head into the 2007 summer season. For starters, anyone who judged the team led by former ESPN guru Mark Shapiro based on last year's inherited campaign doesn't understand that turnarounds take time.

Rushing to judgment is silly. Shapiro's vision of customer-friendly parks that appeal to young families isn't supposed to materialize overnight. However, even in Shapiro's freshman season, you saw the spark of something special. Yes, attendance fell by 13%, but revenue per capita soared 14%. So the top line was essentially flat, with the average guest rewarding the makeover by opening his or her billfold wider.

The goodwill that Six Flags stirred up in 2006 is starting to pay off. Season-pass presales were up substantially earlier this year. The company also posted healthy first-quarter results earlier this month. Obviously, this isn't much of a telltale period in an industry that lives and dies between Memorial Day and Labor Day, but the limited report is encouraging. Attendance rose 6% and per-capita spending shot up another 13%.

The family-friendly version of Six Flags has lined up sponsors like Home Depot (NYSE:HD) and Nintendo (NASDAQ:NTDOY.PK). Kid magnets like Thomas the Tank Engine and The Wiggles have made their way into a few of the parks in the form of themed attractions. Food concessions have been upgraded through brand-building deals with Papa John's (NYSE:PZZA) and Johnny Rockets.

I don't plan on hitting any of the parks this summer, but the early reports online have been resoundingly positive.

The company completed the sale of seven of its smaller parks last month. The $312 million deal may not seem like much. The parks being sold accounted for 13% of the company's EBITDA (earnings before interest, taxes, depreciation, and amortization) in 2006, and $312 million is just 11% of the company's $2.8 billion in enterprise value.

Beyond the prettier balance sheet, now that the deal is done and the company's debt has been restructured, Six Flags is left with stronger parks that performed at depressed levels in recent years. If Shapiro's vision proves true -- and it certainly seems that way -- focusing on its most prolific properties is the quickest path to a brand makeover.

So let the bears gather around. If I'm right -- and the Six Flags turnaround is closer than most think -- it won't be long before the bears start hibernating during the summer, too.    

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Longtime Fool contributor Rick Munarriz enjoys taking his family on summer coaster treks. He does own units in Cedar Fair. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.