Bill Ackman’s Pershing Square recently bought a 12.2% stake in Canadian Pacific Railway. The moved spurred speculation that the well-known activist hedge fund manager might seek a sale, reports Businessweek.
Bill Ackman isn’t Selling CP Rail
Bill Ackman isn’t planning on selling. “We don’t think the company should be sold,” Ackman said yesterday according to Businessweek. “This is not a case where we’re pushing to sell the company. We don’t think that’s a good way to optimize the outcome for shareholders.” Over the weekend, CP rail told employees in a memo that it is “open to the views of its shareholders.” It said, “We will speak with Pershing Square to hear their input into our plan, already targeted at realizing greater efficiency and improved service reliability.” Businessweek reports that Ed Greenburg, a spokesman for CP Rail, “has said the railroad isn’t commenting on Ackman’s investment.”
Pershing Square is an Activist Hedge Fund
Bill Ackman’s Pershing Square is an activist hedge fund. This means that it buys stakes in companies that are large enough to provide the fund a voice in its management and operations. Ackman then pushes for the changes that will bring the greatest shareholder value, generally either revamping operations, installing new management or provoking a sale or division of the company. For example, Ackman did this recently with JC Penney (JCP) when he advocated to install Ron Johnson, ex-Apple exec, as the company’s CEO.