Saw the news here late this afternoon.
http://www.nytimes.com/2016/08/04/business/dealbook/ackmans-hedge-fund-sells-off-big-stake-in-canadian-pacific.html?_r=1
He did his job and is entitled to take his profit. I'd defy anybody to say his detection of underperformance by CP and the Green team was off-target. The old management was lazy and in any other industry would have been given the shoe much earlier.
In railroading, it takes a little longer -- or used to. Ackman reminded the industry of how the modern business world, of which railroading had better be a part, works.
Los Angeles Rams Guy Saw the news here late this afternoon. http://www.nytimes.com/2016/08/04/business/dealbook/ackmans-hedge-fund-sells-off-big-stake-in-canadian-pacific.html?_r=1
dakotafred He did his job and is entitled to take his profit. I'd defy anybody to say his detection of underperformance by CP and the Green team was off-target. The old management was lazy and in any other industry would have been given the shoe much earlier. In railroading, it takes a little longer -- or used to. Ackman reminded the industry of how the modern business world, of which railroading had better be a part, works.
CPRS' so-called "underperformance" under Fred Green has been discussed ad nauseum. The problems that CPRS had started LONG before Green took the reins. He was trying to fix the mess left by his predecessor Rob Ritchie and was on his way to doing so; albeit slowly. CPRS may have made great strides in the last four years but it's come at a tremendous cost to the employees and customers as well.
CN passed over Keith Creel for CEO in favour of Claude Mongeau, now Ackman decides to get out of CP a few weeks after they announce Creel will become CEO next year, wonder what it is about that guy...
Greetings from Alberta
-an Articulate Malcontent
I wonder how much Pershing Square made on its "investment" in CP. It's fairly common knowledge that the fund took a substantial hit on some of its pharmaceutical company speculations.
As Fred stated, CP was the industry laggard, and they needed a team to go in and make some long overdue changes. That team came in the form of Ackman, Harrison and Creel. Now, a couple or three years later, CP is nolonger the industry laggard. As Claude Mongeau (the former CN CEO) so aptly put it, each railway system is somewhat dependant on the others, and one weak player (i.e. CP) hurts everyone as overall rail service is diminished to the extent that CP is underrperforming relative to its peers. He hit the nail on the head. A strong CP is beneficial to the industry as a whole, even where others are not direct competitors of CP. Personally I believe Ackman and other activist investors perform a great service.. not only did he benefit from the share value appreciation and overall improvement to CP's numbers, all of us who own shares in CP benefitted even though most of us are passive investors and did absolutely nothing but ride the wave.
I don't believe CN passed over Keith Creel for CEO. Creel was/is Harrison's protege from years ago, and his going to CP was almost a given when CP hired Harrison. Fortunately both CN and CP have lots of good talent to pick from, and the choice of Mongeau for CN turned out to be a good one.
Ding Dong the witch is dead
Ackman officially resigns from CP Board.
http://www.progressiverailroading.com/canadian_pacific/news/CPs-board-elects-Denham-Fatt-Ackman-resigns--49377
Never too old to have a happy childhood!
5 years ago, CP stock was about $47 per share. A few days ago it was about $155/share - Not a bad return for the investors.
Modeling BNSF and Milwaukee Road in SW Wisconsin
CSSHEGEWISCH I wonder how much Pershing Square made on its "investment" in CP. It's fairly common knowledge that the fund took a substantial hit on some of its pharmaceutical company speculations.
jrbernier 5 years ago, CP stock was about $47 per share. A few days ago it was about $155/share - Not a bad return for the investors.
[snip] "...Ackman led the successful effort to install new board members and new management at CP in 2012 when the company was the worst-performing Class 1 railroad in North America. Since that time, CP has generated more than $14 billion in shareholder value and its share price has outperformed the S&P/TSX Composite by 120 percent through the end of 2015. During Ackman's tenure on the board, CP transformed from railroading's biggest laggard to one of the industry's very best. "I am proud to have served alongside so many passionate and diligent board members, and to have worked with management and the entire CP team on one of the most successful turnarounds in North American corporate history," Ackman said. "I am confident that with CP's superb management and strong governance, it will extend its remarkable track record into the future."... [snipped
Seems to be a pretty typical piece churned out by the Corporate Public relations Dept.,"... so and so is out, and here are the new guys..." Sights all the 'good stuff' that was accomplished by Bill Ackman, and the new B.O.D. member's [both Bean Counters] experience, and their high expectations....
samfp1943 jrbernier 5 years ago, CP stock was about $47 per share. A few days ago it was about $155/share - Not a bad return for the investors. The Newswire of this date carries a story regarding the change at CPR's Board... [snip] "...Ackman led the successful effort to install new board members and new management at CP in 2012 when the company was the worst-performing Class 1 railroad in North America. Since that time, CP has generated more than $14 billion in shareholder value and its share price has outperformed the S&P/TSX Composite by 120 percent through the end of 2015. ~snip~
The Newswire of this date carries a story regarding the change at CPR's Board...
[snip] "...Ackman led the successful effort to install new board members and new management at CP in 2012 when the company was the worst-performing Class 1 railroad in North America. Since that time, CP has generated more than $14 billion in shareholder value and its share price has outperformed the S&P/TSX Composite by 120 percent through the end of 2015. ~snip~
The above sentence is the relevant part of this equation, it's the only thing that investment companies like Pershing Square are interested in...they don't really care about the company they invest in at all, just increasing shareholder value...the Wall Street way of thinking. Railroading is not like your normal business, it needs to look at the long term, and I don't mean 5, 10 years down the line, I'm talking 20, 30, 50 years ahead, that's how a railroad should be managed. Doing so of course might make your carrier a "laggard" in regards to the other big carriers, but do you want to prepare for the future, or for the next earnings call. Fortunately there is at least one carrier that no longer has to worry about earnings calls, and it will most likely be the best run as long as it has good management...that's a hallmark of all businesses owned by Berkshire-Hathaway, buy a well performing company with good management and leave that management in place to do their jobs with no interference from Omaha.
I doubt the rails have any better ability than anybody else to see "20, 30, 50 years ahead." Even 10 years ago, how were they to foresee the Bakken oil play and the corresponding demand for transportation? (Did you?) How were they to foresee, back when they built the infrastructure to support Powder River, that an Obama administration would come along to declare war on coal? (And even if they had, what was wrong with making all the money off it they have for 40 years?)
Scorning profits and stock price is a novel theory of doing business. I can't think of any other industry that does it. Forty years ago DPM was bemoaning how railroads couldn't attract capital because they earned less return than a checking account.
Anyone want to return to those good old days?
I haven't seen anyone allege that Harrison or anybody else in the industry is letting the physical plant go to hell or otherwise running down the business for the sake of maximizing profits or running up their stock price. Their return is about what you would look for in a healthy business, hardly excessive.
Some people don't know when they are well off.
dakotafredI haven't seen anyone allege that Harrison or anybody else in the industry is letting the physical plant go to hell or otherwise running down the business for the sake of maximizing profits or running up their stock price. Their return is about what you would look for in a healthy business, hardly excessive. Some people don't know when we are well off.
Some people don't know when we are well off.
The surviving carriers learned their lessons about deferred maintenance going through the 50's-60's-70's.
I'm hoping that the the CSX and NS decisions to downgrade the track classes and slow down train speeds to save the cost of maintaining the track to the current higher class doesn't come back to bite them in the butt.
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