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.

Warren Buffett To Sell Union Pacific & Norfolk Southern Stakes (UNP & NSC)

Following Warren Buffett & Berkshire Hathaway's announcement of their Burlington Northern (BNI) purchase, we now see that he is set to make another round of moves in the railroad industry. As of last portfolio disclosures, Buffett owned shares in Burlington Northern, Union Pacific, and Norfolk Southern. Upon his impending acquisition of BNI, we now see that Berkshire Hathaway will sell their entire remaining 9.5 million shares of Union Pacific, a 2% stake in the company. Additionally, they will also sell their entire Norfolk Southern position of 1.9 million shares (or 1% of the company).

They will liquidate these positions between now and the impending transaction date for their BNI purchase as the news was revealed recently by Matthew K. Rose, chief executive of Burlington Northern. Buffett already owns 22.6% of BNI and will purchase the rest of the shares for $100 per share in cash and stock. In terms of other recent activity out of Buffett, we also saw that he has yet again sold shares of Moody's (MCO), his third sale this year. For more resources on Warren Buffett, check out Warren Buffet's recommended reading list, as well as the top 25 Warren Buffett quotes. Stay tuned next week as new disclosures (form 13F) will be filed with the SEC and we will update Berkshire's other portfolio activity.