Top 5 Stocks to Buy According to John Orrico’s Water Island Capital

3. Kansas City Southern (NYSE:KSU)

Water Island Capital Stake Value: $123,354,000
Percentage of Water Island Capital’s 13F Portfolio: 7.1%
Number of Hedge Fund Holders: 59

In December 2021, Canadian Pacific Railway Limited (NYSE:CP) acquired Kansas City Southern (NYSE:KSU) for $31 billion. On January 27, Canadian Pacific Railway Limited (NYSE: CP)’s fourth-quarter EPS came in at C$0.95, below the estimates by C$0.02.

On December 20, Evercore ISI analyst Jonathan Chappell initiated coverage of Canadian Pacific Railway Limited (NYSE:CP), upgrading the stock to “Outperform” from “In-Line”, and giving it a price target of $85 after the company’s proposed merger with Kansas City Southern (NYSE:KSU).

At the end of the third quarter of 2021, 59 hedge funds tracked by the database of Insider Monkey held stakes worth $4.32 billion in Kansas City Southern (NYSE:KSU), down from 61 in the preceding quarter totaling $3.30 billion.

In its first-quarter 2022 investor letter, Miller/Howard Investments discussed Kansas City Southern (NYSE:KSU), detailing its stance on the firm. Here is what the fund said:

“Canadian Pacific Railway (CP) agreed to acquire Kansas City Southern (KSU) in the largest rail deal in over a decade. The merger will create the first rail network connecting Canada, the US, and Mexico, and it should benefit from the passage of the USMCA Trade Agreement. We initiated a position in KSU in Q4 as we expected it to benefit from growing North American trade and viewed it as a consolidation candidate.”