5 Stocks Canadian Investors Love

2. Canadian Pacific Railway Limited (NYSE:CP)

Number of Hedge Fund Holders: 41     

Canadian Pacific Railway Limited (NYSE:CP) owns and runs a transcontinental freight railway in Canada. The firm is one of the few transport stocks with enhanced exposure to the agriculture sector and also benefits from merger activity that aims to connect the United States, Canada, and Mexico through the rail. If the firm is able to buy Kansas City Southern, it will have access to the US Midwest as well as all major Mexican industrial, energy, and metropolitan hotspots, connecting the Mexican industry to the US and onwards to Canada directly. 

On July 6, Susquehanna analyst Bascome Majors maintained a Positive rating on Canadian Pacific Railway Limited (NYSE:CP) stock and lowered the price target to $84 from $91, noting that for rail stocks, “volume recovery is at risk from macro downside or capacity constraints”.

Among the hedge funds being tracked by Insider Monkey, London-based investment firm TCI Fund Management is a leading shareholder in Canadian Pacific Railway Limited (NYSE:CP), with 55 million shares worth more than $4.6 billion.  

In its Q3 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Canadian Pacific Railway Limited (NYSE:CP) was one of them. Here is what the fund said:

“The other major headwind to relative performance in the quarter was Canadian Pacific Railway Limited (NYSE:CP). The stock has been a strong performer for the Strategy but negative sentiment around its bidding war for U.S. rail operator Kansas City Southern has weighed on the stock since late May. As a result, the cyclical uptick we expected from the company has been masked by the takeover. Indeed, we have been frustrated by the muted performance among Canadian Pacific Railway Limited (NYSE:CP) and other recently added positions in our structural bucket of growth companies with more cyclical business models or that are undergoing a restructuring that should lead to a step change improvement in earnings. As more regions reopen from COVID-19 and spending rebounds, we expect better performance from our structural names, including Airbus and hospitality and food service provider Compass.”