Ackman, owner of the Pershing Square hedge fund has leaked his intentions to delete his holdings in the Canadian Pacific Railway by a third over the -coming year. Pershing Square currently holds 13.8 per cent of the entire stock of the company, with Ackman now feeling that the time is ripe for some profit-taking.
/By Stanley Green/
Bill Ackman, one of the United States most aggressive activist investors, made a few waves during 2012 at Canadian Pacific, in particular persuading the railroad’s shareholders to part company with half of the board, which he accused of underachieving. In their place Ackman convinced hard-hitting railroad executive Hunter Harrison, the former CEO of the Canadian National Railway (CNR), to come out of retirement to take the role as CEO at Canadian Pacific. Ackman once again showed his astute ability for picking the right man for the right job by appointing Mr Harrison. Within the space of 12 months Canadian Pacific’s share price has more than tripled since Pershing Square made their first investment.
Ackman has admitted to the press that Pershing Square’s shareholding in Canadian Pacific is now equivalent to 26 per cent of his hedge fund’s total value, estimated to be around eight billion dollars in assets held over eleven positions.
According to Ackman’s announcement Pershing Square intend to gradually sell seven million shares of the 24.2 million shares that the company holds in Canadian Pacific.
After the share sell-off has been completed, Pershing Square still expects to be the largest shareholder in Canadian Pacific.
The profits to be added to the Pershing war chest by the gradual share sell off will also help to offset the losses made by Pershing Square’s investments in the JC Penney, department store chain. Once again Ackman came into Penney with guns blazing, ousting the incumbent chief executive Bill Ullman and replacing him with Ron Johnson, who he had headhunted from Apple to pull the company into the 21st Century.
However, Johnson did not prove to be up for the job, and Ackman ate some humble pie by agreeing to the reinstatement of Ullman , a move which may well have convinced George Soros take a major shareholding in the company. Since Ullman and Soros came on board, Penney’s fortunes are also making a revival, with their share value having risen by 23 percent in a month. At a recent shareholders meeting, Ullman candidly admitted that the company still has lots of work to do to rebuild trust with consumers.
Largely due to the excellent performance of Canadian Pacific , Pershing Square is enjoying an upturn in fortune, with their assessed values having increased by nine per cent since the beginning of 2013, according to satisfied investors.