TCI Fund Boosts Canadian Pacific Railway Stake

Sir Chris Hohn's TCI Fund management has filed an amended 13G with the SEC regarding its position in Canadian Pacific Railway (CP).  Per the filing, TCI Fund now owns 7.62% of the company with over 10.56 million shares as of August 23rd. 

This is up from the previous 10.15 million shares they owned at the end of June.  TCI has bought CP shares for seven consecutive quarters and their stake is now worth almost $2.5 billion.  They originally initiated the position in the first quarter of 2018.

It should also be noted that Hohn's firm also owns stakes in other railroads, such as Canadian National (CNI ~ $1.75 billion worth) and Union Pacific (UNP ~ $800 million worth), but their stake in CP is the most sizable.

Per Yahoo Finance, Canadian Pacific Railway "owns and operates a transcontinental freight railway in Canada and the United States. The company transports bulk commodities, including grain, coal, potash, fertilizers, and sulphur; and merchandise freight, such as energy, chemicals and plastics, metals, minerals and consumer, automotive, and forest products. It also transports intermodal traffic comprising retail goods in overseas containers. The company offers rail and intermodal transportation services through a network of approximately 12,500 miles serving business centers in Quebec and British Columbia, Canada; and the United States Northeast and Midwest regions. Canadian Pacific Railway Limited was founded in 1881 and is headquartered in Calgary, Canada."

Pershing Square To Sell Entire Canadian Pacific Stake

Bill Ackman's Pershing Square has announced with Canadian Pacific (CP) that the hedge fund will be selling the rest of its remaining CP stake with a public offering of just over 9.84 million shares.

Apparently Ackman will be using the proceeds to deploy into one or more new positions.  He will also stay on CP's board until the next annual meeting.

You can view other recent portfolio activity from Pershing Square here.

Per Google Finance, Canadian Pacific "together with its subsidiaries, operates a transcontinental railway in Canada and the United States. The Company operates in rail transportation segment. The Company's business mix includes bulk commodities, merchandise freight and intermodal traffic over a network of approximately 12,500 miles, serving the principal business centers of Canada from Montreal, Quebec, to Vancouver, British Columbia, and the United States Northeast and Midwest regions. The Company transports bulk commodities, merchandise freight and intermodal traffic. Bulk commodities include Canadian grain, U.S. grain, coal, potash, and fertilizers and sulfur. Merchandise freight consists of finished vehicles and automotive parts, as well as forest and industrial and consumer products. Intermodal traffic consists of retail goods in overseas containers that can be transported by train, ship and truck and in domestic containers and trailers that can be moved by train and truck.."

Pershing Square's Latest Presentation on Their Holdings

Bill Ackman's hedge fund firm Pershing Square Capital Management recently released its slideshow presentation from its European Investing Meeting.

In it, they update the status/progress of their investments with numerous slides on each name regarding their thesis and how it's playing out. 

The investments profiled include: Mondelez (MDLZ), Air Products (APD), Zoetis (ZTS), Restaurant Brands (QSR), Canadian Pacific (CP), Howard Hughes (HHC), Valeant Pharmaceuticals (VRX), Platform Specialty Products (PAH), Fannie Mae/Freddie Mac, Nomad Foods (NOMD), and their short of Herbalife (HLF).

Embedded below is Pershing's latest presentation:



You can download a .pdf copy here.

Pershing Square Semi Annual Report: Mondelez, Nomad Foods & More

Bill Ackman's hedge fund firm Pershing Square is out with its semi-annual report and second quarter letter.  Year to date through July 2015, Pershing Square Holdings was up 10.1% net.  This obviously doesn't include the volatility in August and they note they were down for the year as of recent activity, but still outperforming the indices.


Pershing's Thesis on Mondelez

Ackman's letter provides an update on their new position in Mondelez (MDLZ), writing

"We believe that now is an attractive time to invest in Mondelez because its profit margins are just beginning to expand after several years of limited improvement.  In addition, we believe that 3G Capital, through its ownership of Hertz, and now Kraft, has established new benchmarks for operational efficiency, organizational design and management alignment which have allowed 3G companies to be more profitable, nimbler, and better positioned to grow over the long-term.  We believe that 3G's higher standards for operating performance will catalyze a competitive response in the packaged foods industry, leading to greater operating margins and profitability for Mondelez and other companies in the industry."


Pershing's New Position in Nomad Foods

The firm also talked about their new purchase of Nomad Foods (NHL).  They purchased $350 million in a private placement of Nomad's common stock during its acquisition of Iglo Group in June, giving them a 22% ownership stake. 

Nomad is a specialty purpose acquisition company (SPAC) sponsored by Martin Franklin and Noam Gottesman.  Pershing has worked with Martin before in a previous SPAC (Justice Holdings) that then became Burger King (now known as Restaurant Brands).

The thesis here is a consolidation play as they believe Iglo is a platform investment to then acquire more of the packaged food industry.

Pershing writes,

"Iglo is the leading branded frozen food business in Europe with euro 1.5 billion in sales. It is a stable, high margin (20% EBITDA margin), free-cash-flow-generative business.  It has a leading share in European frozen foods at 2.2 times the size of the next largest competitor, with strong brand equity.  Historical growth in the business has been flat, but management sees opportunity for organic growth by expanding the company's great brand names into adjacent frozen food categories."


In its letter, Pershing also provides updates on Valeant Pharmaceuticals (VRX), Air Products and Chemicals (APD), Canadian Pacific (CP), Zoetis (ZTS), Restaurant Brands (QSR), their short of Herbalife (HLF), Fannie Mae/Freddie Mac (FMCC), and.


Embedded below is Pershing Square's semi-annual report / Q2 letter:



You can download a .pdf copy here.

For more on this firm, head to Bill Ackman's presentation at the Delivering Alpha conference.

Pershing Square's Presentation From European Investor Meeting

Bill Ackman's Pershing Square Holdings has just released a presentation on its portfolio from a recent European investor meeting.

In it, the hedge fund outlines their thesis on various portfolio companies and updates regarding those positions.  They also offer a look at their thinking on a recent addition to their portfolio: Valeant Pharmaceuticals (VRX).

Embedded below is Pershing Square's presentation from its recent European investor meeting:



You can download a .pdf copy here.

For more from this hedge fund, check out Pershing Square's annual report here.

Bill Ackman's Pershing Square Q3 Letter: Zoetis, Allergan & More

Bill Ackman is out with Pershing Square Capital's third quarter letter to investors.  Pershing is up 35% net for the year as of the end of October.  The Q3 letter outlines Ackman's thesis on his newest holding: Zoetis (ZTS). 

ZTS is a spin-off from Pfizer and is an animal health company.  Ackman took this position alongside Sachem Head Capital, another activist hedge fund run by Scott Ferguson (who previously worked at Pershing).

He likes that Zoetis has a durable product portfolio and is involved in markets with secular growth. Ackman writes, "We believe Zoetis is a scarce asset."

Additionally, Ackman outlines the Allergan (AGN) saga and also gives updates on his positions in Canadian Pacific (CP), Howard Hughes (HHC), Platform Specialty Products (PAH), Fannie & Freddie, Air Products (APD), as well as his Herbalife (HLF) short.

Embedded below is Pershing Square's Q3 letter:



For more from Ackman, check out some of his recent conference appearances: Ackman's fireside chat at Invest For Kids Chicago as well as Ackman's talk at Great Investors' Best Ideas Dallas.

Bill Ackman's Fireside Chat at Invest For Kids Chicago

We're posting up notes from Invest For Kids Chicago 2014.  Next up is a fireside chat that Mick McGuire of Marcato Capital had with Bill Ackman of Pershing Square.  McGuire worked at Pershing before launching his own fund.


Bill Ackman's Fireside Chat at Invest For Kids Chicago

•    Pershing Square up over 30% this year. Benefiting from a Jim Bean sale, Platform Specialty, Air Products, Burger King, Herbalife continue to play out, Pershing Square Holdings and other newsworthy items.


•    Allergan (AGN) – revised their disclosure to include they are in active merger discussions with what Bill thinks is Actavis.
•    Ackman believes VRX can offer the most value versus Actavis. VRX has demonstrated track record for material acquisitions. More comfort with VRX vs. Acatvis. Actavis could be the white knight perhaps.
•    Either party will have to offer stock in the deal. Allergan has put themselves up for sale.
•    Thinks the best thing is that AGN asks for bids from VRX/Actavis and take the best/highest bid. December meeting is relevant. Co did everything they can to stop shareholders from voicing their views.
•    Incentive to negotiate before directors get thrown off.
•    AGN – essentially a management change with many synergies if VRX acquires.



•    Fannie and Freddie (FNMA / FMCC) now. They were short when Mick was at Pershing. Increased exposure in light of the case.
•    Fannie/Freddie two of the best businesses in the world.
•    Very safe business. Allows banks to sell/offload 30 yr mortgage which isn’t a good instrument for banks yet is very helpful to homeowners.
•    They di-worisified their business by buying fixed income securities (subprime, etc.). That is why Pershing was originally short before the US government recapitalized the company.
•    Became profitable in late FY11, when housing markets recovered. Over-reserved during the crisis. Heading back to their core mission/business. Bought them on that basis.
•    USA government took 100% of future profits of both entities, excuse was that they could never pay the government back. That was false, on their way to pay back the government.
•    Largest taking of a private asset by the government. Thankfully, it’s illegal. 5th amendment.
•    Judge Lamberth decision wasn’t about the takings claim which matters the most.
•    His best argument (for a hostile judge) is that shareholders can still trade the stock and make a profit. This could ultimately go to the Supreme Court.
•    Maybe Republicans want to get this solved and recapitalized. Very interesting risk reward, stock went from a dollar on the lost. Think it’s worth $40 - $50.
•    Reminds him of GGP when it was bankrupt.
•    “Always bet on America”
•    How do you size an opportunity on Fannie/Freddie? AGN hard to lose money but make 2x, make it bigger. Fannie could lose a lot but make a ton, hence for Pershing its 2% position.


•    Canadian Pacific (CP) next topic. Started buying September 2011. June 2012 gained control. One of the best industrial turnarounds.
•    Canadian Pacific approached CSX about a potential transaction, was rebuffed.
 •    Investment business – learned a lot over time. Started out buying cheap companies, now really emphasizes quality of business. Didn’t emphasize management at first, but Hunter at Canadian Pacific really shows the power of a strong management team.


•    Air Products (APD): Thinks the company could improve with the new CEO.


•    Howard Hughes (HHC) – brought on a strong management team that developed the assets and created a lot of value.


•    Platform Specialty Products (PAH) was a cash shell, great example of management. Raised $900MM, Pershing brought $300MM. Martin the CEO made an acquisition, the stock doubled. Bought a business in an auction. Starting to consolidate the specialty chemical industry.


•    On Executive Compensation: When you are going into these situations how do you think about the ideal CEO compensation structure? Bill’s response: S&P 500 co usually pays $10MM - $12MM, mix of cash options, restricted stock. Doesn’t align mgmt as they continually want lower priced options, especially if an acquisition occurs (more upside to them ~ not exact wording)
•    Sold a warrant of 4% of the outstanding shares with sale restriction at FMV to the CEO (did this for Howard Hughes).  Warrant went from $15MM to $250MM, 6 yr holding period, alignment and good upside for the CEO.
•    With Hunter who was 67, his incentives was also reputational. Gave him options upfront.


•    Thinking of Philanthropy: Always viewed as business as a way to make money in order to do good.  A lot of good is created by capitalism.
•    One philanthropy investment in Mexico giving iPads to store owners to run their stores better. Pepsi/ Nestle tracking data and the small store owners become more profitable through better management.
•    No cure – medical device to solve certain cancers. Prefers to invest in for profit to solve good as people are economically incentivized.
•    For things that there is no for profit solution, will do big grants (cultural, etc.). Never invest in a not for profit if there is a for profit competitor/solution.

For more from Ackman, he recently talked at the Great Investors' Best Ideas Dallas conference as well.


Be sure to check out the rest of the hedge fund presentations from Invest For Kids Chicago here.

Pershing Square Trims Canadian Pacific Stake

Bill Ackman's hedge fund firm Pershing Square Capital Management has filed an amended 13D with the SEC indicating they've trimmed their stake in Canadian Pacific Railway (CP).

Per the filing, Pershing now owns 8% of the company with over 13.9 million shares.  This is a decrease of over 3.2 million shares since their last disclosure at the end of 2013. 

The latest filing was due to activity on April 28th and indicates they sold at $149.75.  CP has been a big winner for Pershing so it appears as though they're simply locking in some profits.

In other recent activity, Ackman has also built a new Allergan stake.

Per Google Finance, Canadian Pacific is "has 14,700-mile network serving the principal business centres of Canada, from Montreal to Vancouver, British Columbia and the United States Midwest and Northeast regions. Its network is consisted of four primary corridors: Western, Eastern, Central and the Northeast the United States."

Pershing Square to Trim Canadian Pacific Stake

While Bill Ackman has been in the media a lot for his J.C. Penney and Herbalife plays, the Pershing Square founder also has quite a successful investment on his hands: Canadian Pacific (CP).  And now we get news that he's set to trim his stake by $800 million or so.

Post-sale, the hedge fund will retain around a 9.8% ownership stake in the railroad.  CP has been a big winner for Ackman, tripling his investment. 

Various investment banks are leading the sale of CP shares and this is the second time this year that Ackman has trimmed his CP stake, as he did so this summer already.

For more from this hedge fund manager, head to Bill Ackman's Q3 letter.

Bill Ackman's Q2 Letter: Updates on Pershing's Positions

The New York Post has shared Bill Ackman's Q2 letter and it's quite in-depth and worth highlighting.  The Pershing Square manager provides updates on many of his positions, including his new position in Air Products & Chemicals (APD), his controversial Herbalife (HLF) short, as well as their troubled stake in J.C. Penney (JCP) and more.

Embedded below is Ackman's Q2 letter:




For more from this manager, you can check out Ackman's presentation on Procter & Gamble.

Bill Ackman's Pershing Square to Trim Canadian Pacific (CP) Stake

Bill Ackman's hedge fund firm Pershing Square Capital Management filed an amended 13D with the SEC regarding their activist position in Canadian Pacific (CP).  Per the filing, Pershing has reported a 13.8% ownership stake in CP with 24,159,888 shares.  They also included a press release that indicated they plan to sell up to 7 million shares of CP.


Here's the full press release below:

"NEW YORK, June 3, 2013 — Pershing Square Capital Management, L.P. announced today that it plans to sell up to seven million common shares of Canadian Pacific Railway Limited (TSX: CP; NYSE: CP). Pershing Square plans to limit these sales to unsolicited brokers’ transactions on the NYSE and the TSX in amounts that will not exceed 10% of the combined NYSE and TSX volume for the CP common shares on any day of trading. The sales will begin on or after June 10, 2013 and will likely be completed over the next six to twelve months.

Pershing Square CEO Bill Ackman said: “Thanks to Hunter Harrison’s and the CP team’s performance over the last nearly one year, Canadian Pacific’s share price has more than tripled since we first invested in CP. As a result, our stake in CP has grown to approximately 26% of the combined assets of our funds. Given that increased concentration, portfolio management considerations have driven our decision to trim our holdings. Even after these sales, we expect to remain CP’s largest shareholder and for CP to remain one of our largest investments.”

Pershing Square’s representatives, Bill Ackman and Paul Hilal, will continue to serve on the company’s board of directors. They were elected to the board in May 2012 after successfully nominating a slate of directors as part of a proxy contest. Shortly thereafter, the company appointed rail industry veteran Hunter Harrison as its CEO.

“We can’t overstate our appreciation for Canadian Pacific’s employees and the important contributions of our fellow board members,” said Paul Hilal.

Under Canadian rules, Pershing Square will make filings within three days following sale transactions, disclosing the price and number of shares sold.

Pershing Square reserves the right to change the plans described above at any time, but if it changes these plans it intends to promptly announce the change.

This press release does not constitute an offer to sell or the solicitation of an offer to buy CP common shares."


CP has been a big winner for Pershing as shares have rallied over 137% from the time Pershing initially disclosed their stake.  We highlighted Pershing's CP activist position in October 2011.

What We're Reading ~ Hedge Fund Links 4/12/13

Notes from Jeff Gundlach's DoubleLine lunch [Reformed Broker]

Diworseification: avoiding over-diversification with best idea funds [SumZero]

Lee Cooperman: stocks are the place to be [HFIntelligence]

Alternative investments are no longer all that alternative [Abnormal Returns]

Vulcan Value Partners offers top investing ideas [Barrons]

Third Point plans Greece fund [Bloomberg]

Some March hedge fund performance numbers [HFIntelligence]

Are hedge fund-backed reinsurers here to stay? [Reuters]

Ackman says mistakes were made in JC Penney (JCP) turnaround [Reuters]

Paulson said to start fund to reduce clients' tax bills [Bloomberg]

Quant funds run one-third of hedge fund assets [HedgeWorld]

Agrium (AGU) sweeps proxy vote, JANA Partners cries foul [Reuters]

Canadian Pacific (CP): Off the tracks after Ackman [Seeking Alpha]

Institutional herding in the corporate bond market [SSRN]

An old profile of Carl Icahn [LATimes]

Whitney Tilson's Kase Capital Q1 Letter: Pitch on Deckers, Sears Hometown & Outlet Stores

The hedge fund duo of Whitney Tilson and Glenn Tongue split up last year and now Tilson is managing his Kase Capital solo.  He just sent out his first quarter letter to investors where he outlines two of his new investments: Deckers (DECK) and Sears Hometown & Outlet Stores (SHOS), which you can read in the letter below.

Kase Capital's Top Holdings

In Kase Capital's letter, Tilson also lists his largest positions:

1. AIG (AIG)
2. Berkshire Hathaway (BRK.A)
3. Howard Hughes (HHC)
4. Deckers (DECK)
5. Citigroup (C)
6. Goldman Sachs (GS)
7. Netflix (NFLX)
8. Canadian Pacific (CP)
9. dELiA*s (DLIA)
10. Iridium (IRDM)
11. Grupo Prisa (B Shares)
12. Sears Hometown & Outlet (SHOS)
13. Spark Networks (LOV)


Tilson's Shorts & Exposure Levels

Tilson also reiterated a few stocks that he's short: InterOil (IOC), K-12 (LRN), and Nokia (NOK).  He's also holding a large cash balance, waiting for better opportunities to deploy capital.  His equity exposure comes in at 66% long and 22% short currently.


Embedded below is Whitney Tilson's Kase Capital first quarter letter to investors for 2013:

Bill Ackman & Pershing Square's Q1 Letter: On Canadian Pacific, J.C. Penney & Citigroup

Bill Ackman's hedge fund firm Pershing Square is out with its first quarter letter to investors.  The hedge fund is up 9.3% year-to-date and updates investors on its holdings in Canadian Pacific (CP), J.C. Penney (JCP), as well as Citigroup (C) and General Growth Properties (GGP).

Pershing highlights that they've started buying a new stake and have added a rare equity short, but they've declined to disclose any names.

In the letter, Ackman touched on the notion of time arbitrage, something he defines as "taking advantage of the opportunity for long-term profit offered when short-term investors sell due to disappointing short-term macro or business progress."

He says that this has been a big source of profits for the hedge fund and long-time readers will know this isn't the first time we've seen this.  John Griffin of Blue Ridge Capital has long classified investments as either time arbitrage or catalyst driven.

Ackman touches on J.C. Penney in-depth in the letter and we've also highlighted Ackman's JCP slideshow from the Ira Sohn Conference.

Ackman is also profiled and interviewed in the brand new book, The Alpha Masters.

Embedded below is Bill Ackman & Pershing Square's Q1 letter to investors:





For more hedge fund letters, head to:

- Greenlight Capital's Q1 letter

- Third Point's Q1 letter

Bill Ackman & Hunter Harrison on Canadian Pacific & Running a Better Railroad

Guest hosting CNBC's Squawk Box yesterday, Pershing Square founder Bill Ackman talked about his activist investment in Candian Pacific (CP) and how to run a better railroad.

His hedge fund has waged a proxy fight with the company as he strives to shake-up management.  He hopes to place Hunter Harrison as the new CEO.  He says the profitability of the company (and operating ratio) of the company is worse than it was six years ago.

We've previously highlighted Ackman's presentation on Canadian Pacific if you missed it.

Ackman says 94% of (institutional) shareholders support management change and 74% of them support Harrison.  The proxy vote is on May 18th.

Embedded below is the video of Ackman's interview on CP:




On Running a Better Railroad

They then brought out Harrison as well as Stephen Tobias (former Norfolk Southern vice chairman) to talk about how to run a better railroad.

Harrison dismissed the lawsuit against him as 'frivolous' as his non-compete expired on January 1st.  He highlighted his track record of execution success at his previous employer of raising prices and improving operating efficiency. He says the railroad business comes down to execution.

Tobias highlighted his track record of 40 years of practical operating experience as a valuable resource he could bring to the board.

As to why CP should implement his management slate, Ackman simply stated: "What attracted us here is you've got a railroad that has half the operating profitability of its direct competitor and the only difference we could figure out is the people running it."

Here's the video:




Also check out Ackman's comments on Barnes & Noble and Burger King, as well as his update on his Hong Kong dollar trade.

Bill Ackman & Pershing Square's Presentation on Canadian Pacific (CP)

Below is Bill Ackman & Pershing Square Capital's presentation on Canadian Pacific (CP), entitled 'The Nominees for Management Change.' As we've detailed, Ackman has gone activist on CP and is seeking to shake-up management.

In the presentation, the hedge fund highlights their past success with General Growth Properties (GGP), JC Penney (JCP), and more. Currently, CP is Pershing's second largest investment as they own 14.2% of the company.

With their proxy contest, they highlight how CEO Fred Green has underachieved and how Hunter Harrison would have been a better selection.

They also highlight the economic rationale for such a change: "Canadian Pacific is 70% the size of Canadian National, yet has an enterprise value 40% as large, due to its inferior profitability and asset utilization."

Embedded below is Ackman & Pershing's presentation on CP (email readers click to view):



For other investment theses from this hedge fund, you can view Pershing's presentation on Fortune Brands Home Security as well.

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.