What: Shares of Intrawest Resorts Holdings Inc (NYSE:SNOW) jumped as much as 33% in early trading Tuesday after announcing a buyback plan. As of 11:00 a.m. ET, shares had fallen slightly and were up 23% for the day.
So what: Intrawest announced a plan for a modified Dutch auction to purchase up to $50 million in stock. The offer price won't be greater than $10 per share, but it also won't be less than $9 per share, which is why shares jumped so much today. The tender expires on February 10, 2016.
Now what: For a company with a $389 million market cap, even after today's pop, this is a huge buyback. What's interesting is that Intrawest has lost money over the past year, so management must see a huge improvement in operations coming. Long term, I think this is a good sign, but it's only one data point, and investors should watch for operational improvements this winter season.
In the meantime, it looks like taking the $9 per share offer price would be a wise move since shares are still trading below that level.
Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.