In the February issue of Trains Magazine I (very rashly) predicted that 2015 would bring an “epic battle” for control over CSX, pitting CEO Michael Ward against activist investor Bill Ackman, whose investment firm Pershing Square Capital Management ousted the leadership of Canadian Pacific in 2012.
Months went by. Nothing happened. Actually, one thing that happened is that nobody reminded me of my silly prediction, and I appreciate that. Still, as day followed quiet day, I knew the time was approaching that I would have to bid farewell to family and friends and walk the narrow plank, to be eaten by crocodiles.
Why on earth did I do this? Frankly, railroading has become a boring business. Not a lot going on out there. Wouldn’t a good proxy fight get our juices flowing? And nothing becomes Michael Ward more than to be embroiled in a battle for survival (of course, if he loses, his jillions of shares are worth a lot more). Anyway, Ackman had been making all the right noises late in 2014, so I took a chance.
Well, maybe I will emerge with my reputation for farsightedness intact. Someone is buying CSX shares with a vengeance. It began about two weeks ago, and trading volume of CSX shares is more than twice average. The buying pressure shot the CSX stock price up 11 percent. Nobody has ventured in public to say who is gobbling up CSX shares, although the UBS rail analyst says this looks suspiciously similar to Ackman’s attack on CP.
Once the buyer has control of 5 percent of the shares, its identify must be revealed within 10 days in a Securities & Exchange Commission filing. Then we’ll know whether I was right all along or must walk that plank after all. In the meantime, feel free to speculate.—Fred W. Frailey
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