Bloomberg News

Ackman Beats Gates With Canada Rail Investment: Chart of the Day

February 09, 2012

Feb. 7 (Bloomberg) -- William Ackman’s campaign for a new chief at Canadian Pacific Railway Ltd. is pushing the stock to bigger gains than the rival carrier he cites as a better-run railroad -- and whose biggest investor is Bill Gates.

The CHART OF THE DAY shows Canadian Pacific’s total return of 23 percent since Oct. 27, the day before Ackman disclosed a stake that made him the largest stockholder. That compares with a 2.2 percent drop at Canadian National Railway Co., in which Gates controls 11.3 percent of shares.

Ackman, who founded Pershing Square Capital Management LP, buys stakes in companies he deems undervalued and advocates changes to improve returns. He’s seeking the ouster of Chief Executive Officer Fred Green as Canadian Pacific trails peers’ profitability and wants to hire Hunter Harrison, who more than tripled earnings during seven years leading Canadian National.

“Canadian National is the best-run railroad, Canadian Pacific is one of the worst,” said Brian Yarbrough of Edward Jones & Co. in St. Louis, who recommends buying Canadian Pacific stock. “While that may sound negative, that’s actually a positive for Canadian Pacific if you can get the right management team in there because it has the most opportunity.”

Ackman holds a 14.2 percent stake in Canadian Pacific. Gates’ Cascade Investment LLC held 9.4 percent of Montreal-based Canadian National’s stock as of Aug. 22, while the Bill & Melinda Gates Foundation held 1.9 percent of shares on Sept. 30, according to Bloomberg data.

Canadian National has gained more than sevenfold since Gates disclosed his holding in October 2000, while Calgary-based Canadian Pacific has climbed almost fourfold since the shares were listed in New York in August 2001.

--Editors: James Langford, Ed Dufner

To contact the reporters on this story: Natalie Doss in New York at ndoss@bloomberg.net; To contact the editors responsible for this story: Ed Dufner at edufner@bloomberg.net;


We Almost Lost the Nasdaq
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus