It is a scene that spells Canadiana like no other: the last spike being driven by Donald Smith into the Canadian Pacific Railway line in British Columbia on that fall day in 1885, an act that joined Canadians together from sea to sea, the life quest of Prime Minister Sir John A. Macdonald. Since then, CP (TSX: CP), in all its forms of transportation, has been one of the solid, enduring companies of not only Canada, but the world.
So attractive has CP been to investors beyond our borders that when such a major stakeholder as activist Bill Ackman announces – as he did in the first week of June – he was trimming his holdings in the carrier, it made waves throughout the financial world.
Pershing Square, the company Ackman founded, said it would sell seven million shares over the next six to 12 months, thus lessening his position size to 17,159,888 shares.
Media outlets noted that, at Tuesday’s trading price of $127.97, the transaction would be worth about $895.79 million, almost earning back his $1 billion he paid for the stake in 2011.
Forbes magazine reported that Ackman said he would reduce the holding, his largest with 31.3% of the portfolio, "because it takes up too much space."
Ackman and fellow Pershing board member Paul Hilal will continue to serve on the company's board of directors. They were elected to the board in May 2012 after successfully nominating a slate of directors as part of a proxy contest. Shortly thereafter, the company appointed rail industry veteran Hunter Harrison as its CEO.
Not that this would shake up the investment picture for the company, but as a carrier of goods and people, CP was also in the news this week with word of a derailment last weekend near the northern Ontario town of Wanup, in the Sudbury area.
The train was making its way over a rail trestle bridge spanning the Wanapitei River when it left the tracks. Happily, there were no injuries.
A probe by the company reported that one of the rail cars experienced a sudden and unexpected wheel bearing failure which caused the rail car to derail just prior to the bridge. The derailed car then struck the bridge causing a larger derailment and further infrastructure damage.
A news release added that 24 intermodal containers were involved in the incident, some entering the river as a result of the derailment. It took several days to get them all out.
Nearing the end of a very newsworthy week, the stock’s price had tumbled Thursday to $125.77, down 23 cents from Wednesday’s close and down substantially from the 52-week high of $144.43, to which the stock climbed on May 22. The stock price bottomed out for the year at $72.00 on June 28.
