Bill Ackman Goes Activist on Canadian Pacific Railway (CP) ~ market folly

Monday, October 31, 2011

Bill Ackman Goes Activist on Canadian Pacific Railway (CP)

Bill Ackman's hedge fund Pershing Square Capital Management has disclosed an activist position in Canadian Pacific Railway (CP) via a 13D filed with the SEC.

This is a brand new position for the hedge fund as they now own 12.2% of Canadian Pacific with 20,659,504 shares due to portfolio activity on October 18th.

Just over 2.6 million of those shares are represented by a call option with a strike price of $30.55 and an expiration date of April 27th, 2012. Shares of CP currently trade around $63.

Regarding why Ackman purchased CP shares, the 13D filing simply states that he thought shares are undervalued and an attractive investment.

This comes after Ackman recently pitched another investment idea at the Value Investing Congress (see his full presentation here).

Per Google Finance, Canadian Pacific Railway "has 14,800-mile network extends from the Port Metro Vancouver on Canada’s Pacific Coast to the Port of Montreal in eastern Canada, and to the United industrial centers of Chicago; Detroit, Michigan; Newark, New Jersey; Philadelphia; New York City and Buffalo, New York; Kansas City, Missouri, and Minneapolis, Minnesota. Its network is consisted of four primary corridors: Western, Eastern, Central and the Northeast the United States. Its business includes bulk, which include grain, coal, and sculpture and fertilizer; merchandise, which include forest products, industrial and consumer products, and automotive; and intermodal."

Pershing Square has been actively buying over the past few months as we detailed how the hedge fund bought $600 million worth of investments in August alone.

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