AgentKid I am sorry to hear of some of the comments made by John (cx500) here and on other forums. Bruce
I am sorry to hear of some of the comments made by John (cx500) here and on other forums.
Bruce
I can't say that I am happy about the situation either, yet pretending that everything is wonderful when they aren't is no service. There are a number of dedicated long service employees who have become so disillusioned that they plan to request retirement at the first opportunity. Organizational restructurings have continued on a regular basis since I retired, rather like shuffling deck chairs on the Titanic (and just as effective). Meanwhile those few who know how to actually keep the railway running struggle as best they can.
"Sweating the assets" (one of the buzzwords) is all very well, but that can backfire. To continue the simile, CP has been left on the sidelines gasping for breath when a significant new traffic flow was up for grabs. A major decline in customer satisfaction is another indication that maybe sweat leaves a stench.
samfp1943 AgentKid: Fred Frailey has written an article about this over in the blog section. Here is the link: http://cs.trains.com/TRCCS/blogs/fred-frailey/archive/2011/11/02/canadian-pacific-in-the-cross-hairs.aspx Over the past week I have come to agree with Frailey's passive investment theory. Even activist investors need to put some of their funds into a safer investment, especially as I think there is another recession around the corner. Canadian Pacific, if nothing else has always been a safe investment. When the current Beaver Shield logo was designed, the year 1881 was pointedly put on it for a reason. CP is the only North American Class 1 railway not to have gone through bankruptcy since that time. And it only ever missed paying a dividend in 1932. A record of staid stability is not the worst thing in today's turbulent economic times. I am sorry to hear of some of the comments made by John (cx500) here and on other forums. Bruce I had posted the following request earlier on this Thread: At this point, it might be interesting to get some input from some Posters here; who are connected to CPR or work for them. I think we have a couple of folks that fall into that category around here from time to time? I know very little about the CPR and its current operations; other than to know that in the last year and this past summer they have taken a series of major hits in the weather and operations areas. But those difficult elements are part of their heritage, one cannot think of the Canadian Rockies and not visualize severe weather conditions, and on the plains, it is either 'feast or famine' weather wise. Conditions and situations that happen so often and regularly, a proactive management should be able to react to without thinking. Just go handle it! So the problems seem to be at that level. The Fred Frailey Blog seems to indicate an upper level of the management structure that has become moribund and complacent . Communications up,and down the corporate structure have quit functioning. Operating ratio is nothing to brag on. Stocks seem to be stagnant. He has high praise for the intuitive Bill Ackman and his sense of a company he can create value in. The Posters who have responded to the Frailey Blog seem to agree with his assessment of what has gone off the rails at CPR . The most recent response from (JBXing) comes across as pretty knowledgeable in things CPR. It would seem that a shakeup is in the cards for the management at CPR from top to bottom, based on the comments. I think the one thing that is not going to happen is a cross boarder merger any time soon. Regulators on both sides of the boarder will have their hands on throats, on both sides in that matter. It will be interesting to watch, and see how it turns out. One thing I think for sure it will shake the US and Canadian rail scenes.
AgentKid: Fred Frailey has written an article about this over in the blog section. Here is the link: http://cs.trains.com/TRCCS/blogs/fred-frailey/archive/2011/11/02/canadian-pacific-in-the-cross-hairs.aspx Over the past week I have come to agree with Frailey's passive investment theory. Even activist investors need to put some of their funds into a safer investment, especially as I think there is another recession around the corner. Canadian Pacific, if nothing else has always been a safe investment. When the current Beaver Shield logo was designed, the year 1881 was pointedly put on it for a reason. CP is the only North American Class 1 railway not to have gone through bankruptcy since that time. And it only ever missed paying a dividend in 1932. A record of staid stability is not the worst thing in today's turbulent economic times. I am sorry to hear of some of the comments made by John (cx500) here and on other forums. Bruce
Fred Frailey has written an article about this over in the blog section. Here is the link:
http://cs.trains.com/TRCCS/blogs/fred-frailey/archive/2011/11/02/canadian-pacific-in-the-cross-hairs.aspx
Over the past week I have come to agree with Frailey's passive investment theory. Even activist investors need to put some of their funds into a safer investment, especially as I think there is another recession around the corner.
Canadian Pacific, if nothing else has always been a safe investment. When the current Beaver Shield logo was designed, the year 1881 was pointedly put on it for a reason. CP is the only North American Class 1 railway not to have gone through bankruptcy since that time. And it only ever missed paying a dividend in 1932. A record of staid stability is not the worst thing in today's turbulent economic times.
I had posted the following request earlier on this Thread:
At this point, it might be interesting to get some input from some Posters here; who are connected to CPR or work for them. I think we have a couple of folks that fall into that category around here from time to time?
I know very little about the CPR and its current operations; other than to know that in the last year and this past summer they have taken a series of major hits in the weather and operations areas. But those difficult elements are part of their heritage, one cannot think of the Canadian Rockies and not visualize severe weather conditions, and on the plains, it is either 'feast or famine' weather wise. Conditions and situations that happen so often and regularly, a proactive management should be able to react to without thinking. Just go handle it! So the problems seem to be at that level. The Fred Frailey Blog seems to indicate an upper level of the management structure that has become moribund and complacent . Communications up,and down the corporate structure have quit functioning. Operating ratio is nothing to brag on. Stocks seem to be stagnant. He has high praise for the intuitive Bill Ackman and his sense of a company he can create value in.
The Posters who have responded to the Frailey Blog seem to agree with his assessment of what has gone off the rails at CPR . The most recent response from (JBXing) comes across as pretty knowledgeable in things CPR. It would seem that a shakeup is in the cards for the management at CPR from top to bottom, based on the comments. I think the one thing that is not going to happen is a cross boarder merger any time soon.
Regulators on both sides of the boarder will have their hands on throats, on both sides in that matter.
It will be interesting to watch, and see how it turns out. One thing I think for sure it will shake the US and Canadian rail scenes.
My guess is that the CP was hit relatively harder because their primary competition, CN, made it through the year without any major disruptions and may well have picked up competitive traffic.
Somewhat reflective of their revenue and earnings, CP's stock traded around $70 per share in late 2007 and early 2008, but fell to below $30 when the recession hit. From that low in the first quarter of 2009, the stock started a slow climb and by early 2011 the stock was trading back near $70. However, when the 2nd and 3rd quarter results came in the stock tanked with a low of about $45. I suspect that Pershing Square got in at somewhere around $50.
Of course, it is entirely possible that Ackerman and his fund have seen something about CP- management problems, undervalued franchise, low rates or whatever-that if turned they think could produce big bucks for shareholders. On the other hand, maybe they believe that a few "normal" quarters or a year's results might get the stock back up to trading in the $70 range, at which point the fund could be looking at a gain of maybe a half billion dollars.
"We have met the enemy and he is us." Pogo Possum "We have met the anemone... and he is Russ." Bucky Katt "Prediction is very difficult, especially if it's about the future." Niels Bohr, Nobel laureate in physics
jeaton Somewhat reflective of their revenue and earnings, CP's stock traded around $70 per share in late 2007 and early 2008, but fell to below $30 when the recession hit. From that low in the first quarter of 2009, the stock started a slow climb and by early 2011 the stock was trading back near $70. However, when the 2nd and 3rd quarter results came in the stock tanked with a low of about $45. I suspect that Pershing Square got in at somewhere around $50. Of course, it is entirely possible that Ackerman and his fund have seen something about CP- management problems, undervalued franchise, low rates or whatever-that if turned they think could produce big bucks for shareholders. On the other hand, maybe they believe that a few "normal" quarters or a year's results might get the stock back up to trading in the $70 range, at which point the fund could be looking at a gain of maybe a half billion dollars.
When this news appeared, I took a look at the stock wondering if there was the opportunity to piggy-back on whatever change was coming. However, it had already risen 25% in the month of October. At close to $65, it was getting too near its pre-trouble price to see a whole lot of opportunity. That, combined with a dividend of less than 2%, led me to take a pass.
Obviously we are not the only ones who think that top management at CP is the problem.
Financial Times on CP
CTV story on CP
BaltACD Having followed The Children's Fund foray into CSX - the impression of the ideas that TCF were trying to push down CSX's throat was that they had been formulated in a Holiday Inn after viewing at train running under a Christmas tree. Railroads have a high degree of fixed plant investment in their cost structure and have all the agility of the QE 2 in moving about the financial oceans. The hedge fund mentality which is accustomed to moving millions and billions of dollars about with the click of a mouse, finds dealing with fixed railroad investment something they are ill prepared to deal with in a rational constructive manner, especially for the railroad to continue to operate safely and profitably.
Having followed The Children's Fund foray into CSX - the impression of the ideas that TCF were trying to push down CSX's throat was that they had been formulated in a Holiday Inn after viewing at train running under a Christmas tree.
Railroads have a high degree of fixed plant investment in their cost structure and have all the agility of the QE 2 in moving about the financial oceans. The hedge fund mentality which is accustomed to moving millions and billions of dollars about with the click of a mouse, finds dealing with fixed railroad investment something they are ill prepared to deal with in a rational constructive manner, especially for the railroad to continue to operate safely and profitably.
There's and article on the Opinion section of the Wall Street Journal's website called "The Mortgage Hangover" written by Nicole Gelinas, that describes a similar fiasco with a California based real estate firm trying to increase profitability with a rent controlled apartment building in the Bronx. Similar to TCF getting into CSX, you had a group of investment managers who had no clue of the specifics with respect to their investment - though TCF did make out a bit better.
Hedge funds come across as being primarily interested in short term gains and as you said, are not well suited for dealing with industries that plan a decade or more ahead. They also have the destructive habit of making money by piling on debt (e.g. Simmons mattresses).
- Erik
cx500 beaulieu: Some lower level Canadian CP management types, have characterized Calgary top level management as more hide bound than most. I was told that Ed Harris, formerly of CN under EHH, who was brought out of retirement to improve CP's operations as EVP-O, quit after not receiving backing from the CEO to make significant changes. Whether this was true, I can't say. But I do know that morale amongst lower level Employees isn't very high. Also local carload customers have started to look for ways to avoid using CP as Car Dwell times and Velocity are not very good compared to other Class Is. Although I retired a few years back, from acquaintances still working I have had more or less the same impression. Except the term "hide bound" may not be the most suitable. The way I hear it, many in the more senior management levels seem to be busy playing management games that do not help the basic business they purport to be managing. The result is, as you say, terrible morale in those closer to reality. Some are hopeful that this could trigger a much needed change for the better.
beaulieu: Some lower level Canadian CP management types, have characterized Calgary top level management as more hide bound than most. I was told that Ed Harris, formerly of CN under EHH, who was brought out of retirement to improve CP's operations as EVP-O, quit after not receiving backing from the CEO to make significant changes. Whether this was true, I can't say. But I do know that morale amongst lower level Employees isn't very high. Also local carload customers have started to look for ways to avoid using CP as Car Dwell times and Velocity are not very good compared to other Class Is.
Some lower level Canadian CP management types, have characterized Calgary top level management as more hide bound than most. I was told that Ed Harris, formerly of CN under EHH, who was brought out of retirement to improve CP's operations as EVP-O, quit after not receiving backing from the CEO to make significant changes. Whether this was true, I can't say. But I do know that morale amongst lower level Employees isn't very high. Also local carload customers have started to look for ways to avoid using CP as Car Dwell times and Velocity are not very good compared to other Class Is.
Although I retired a few years back, from acquaintances still working I have had more or less the same impression. Except the term "hide bound" may not be the most suitable. The way I hear it, many in the more senior management levels seem to be busy playing management games that do not help the basic business they purport to be managing. The result is, as you say, terrible morale in those closer to reality. Some are hopeful that this could trigger a much needed change for the better.
Sounds like CP management needs a dose of what the "Chessie Mafia" at CSX got in the last few years.
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