FILE PHOTO: William Ackman, founder and CEO of hedge fund Pershing Square Capital Management, speaks during the Sohn Investment Conference in New York, May 4, 2015. REUTERS/Brendan McDermid
March 7, 2022
By Svea Herbst-Bayliss
BOSTON (Reuters) -Billionaire investor William Ackman has built a new stake in railroad operator Canadian Pacific, returning to one of his most profitable investments as rail firms eye a boost from the drive to cut carbon emissions and as manufacturing is brought back to the United States and Mexico from abroad.
Ackman’s hedge fund Pershing Square Capital Management reported owning 2.8 million Canadian Pacific shares at the end of Dec. 31, 2021, according to a regulatory filing on Monday. That would value the stake at roughly C$280 million ($220 million) at the stock’s closing price on Friday, a fraction of Canadian Pacific’s market value of about C$92 billion.
Pershing Square had asked the Securities and Exchange Commission for permission to delay disclosing its holding on a recent regulatory filing so that it could continue accumulating more stock. Ackman had told investors earlier this year that he had an undisclosed new position in the portfolio.
By Monday, Pershing Square owned an additional 12 million shares through forward contracts that it intends to exercise, Ackman said. The investment will make Pershing Square one of Canadian Pacific’s top 20 shareholders.
With this new stake in Canadian Pacific, Ackman is going back to a company that had been one of Pershing Square’s biggest winners, earning the firm some $2.6 billion on its investment.
Pershing Square first began buying into the railroad in September 2011, but was forced to sell in 2016 to pay back investors who were pulling out cash as the fund faced losses. Ackman called those sales one of the firm’s “greatest investment regrets.”
Six years on Canadian Pacific is being run by Keith Creel, who took the top job in 2017 after his mentor Hunter Harrison left Canadian Pacific to run rival railway CSX Corp.
“Keith and the team have done a superb job since,” Ackman said, adding: “We are delighted to again be an owner of this remarkable and growing franchise at a time when transcontinental rail infrastructure could not be more important for our economy and our continent.”
Creel engineered a major win last year when Canadian Pacific acquired Kansas City Southern after a protracted battle. The U.S. Surface Transportation Board still needs to give the deal full regulatory clearance.
The merger would set Canadian Pacific up as the first rail company to have a network that extends from Canada to Mexico.
($1 = 1.2727 Canadian dollars)
(Reporting by Svea Herbst-Bayliss; Editing by Kenneth Maxwell and Susan Fenton)