Billionaire Chris Hohn’s 8 Stock Picks with Huge Upside Potential

3. Canadian National Railway Company (NYSE:CNI)

Number of Hedge Fund Holders as of Q4: 56

TCI Fund Management’s Equity Stake: $3.01 Billion

Upside Potential as of May 6: 18.62%

Canadian National Railway Company (NYSE:CNI), a major freight railway operator headquartered in Montreal, continues to demonstrate resilience and strategic agility in a volatile economic environment. For the first quarter of 2025, the company reported total revenues of $4.4 billion, marking a 4% increase year-over-year despite challenging winter conditions and modest volume growth. Diluted earnings per share rose 8% to $1.85, a clear sign of the company’s disciplined operational management and pricing power.

Operational metrics supported this financial performance. Revenue ton miles (RTMs) grew by 1% to 60.0 billion, while CN’s operating ratio—a key indicator of efficiency—improved by 20 basis points to 63.4%. This highlights the company’s ability to enhance profitability even in a low-growth volume environment. CEO Tracy Robinson noted a “strong start to the year,” emphasizing improved financial metrics and successful right-sizing of resources to match demand.

Canadian National Railway Company (NYSE:CNI) also delivered a notable 18% increase in free cash flow, which reached $626 million for the quarter. This was driven by both higher operating income and lower capital expenditures, reinforcing the company’s commitment to efficient capital allocation. Additionally, Canadian National Railway Company (NYSE:CNI) announced a 5% increase in its dividend for 2025, signaling strong confidence in the company’s financial outlook and a consistent focus on shareholder returns.

Among billionaire Chris Hohn’s stock picks with huge upside potential, Canadian National Railway Company (NYSE:CNI) stands out with a statistic of 18.62% due to its combination of financial discipline, infrastructure scale, and transcontinental reach. Its extensive North American network, coupled with improving margins and robust cash generation, positions the company as a compelling long-term investment. As trade dynamics evolve and intermodal demand grows, CN’s strategic positioning and operational efficiency could help unlock meaningful shareholder value over time.

Appalaches Capital stated the following regarding Canadian National Railway Company (NYSE:CNI)  in its Q3 2024 investor letter:

“During the quarter, we established core positions in two railroads: Canadian National Railway Company (NYSE:CNI) and CSX Corporation (CSX). The investment thesis is simple. Domestic railroads have not seen volume growth over the last 20 years despite being the cheapest, cleanest, and safest form of freight transportation.4 The lack of volume growth and related share losses to trucking is due to the poor reliability of the networks. However, there is strong evidence to believe that this may not be the case going forward. It seems that investors are overweighting historical characteristics of the industry and not giving credit to recent and sustainable improvements in service metrics. If the rails are able to show any sign of sustained volume growth, our investment should perform very well.

The Canadian railroads have more or less operated at full capacity over the last two decades, while the U.S. networks have not. Why is that? There are a few reasons for the anemic volume growth domestically, but only one of which is not shared by the Canadian railroads: service. In 2017, had you shipped goods by rail in Canada, the odds that your shipment would arrive on time, or the “trip plan compliance” rate, was around 90% or higher. In the U.S., these levels were closer to 50%.5 Maybe you have a different opinion, but I am not particularly excited about using a shipping service that only has a coin flip’s chance of arriving on time, even if it may be more economical…” (Click here to read the full text)