Will still be largest CP shareholder
Should not be too unexpected - he should “cash in some chips” once in a while to lock-in and ‘realize’ the actual winnings/ gain, reduce the exposure to a downturn, and redeploy the capital to other opportunities.
- Paul North.
I can’t see how this is good for CP, and can see many ways that it is bad. That’s $800 million worth of shares on the market, which will lower the stock price, making it tougher to borrow through the stock market for capital needs, which CP needs badly in the prairies especially. Yet another reason why it is better in my opinion having a single, long-term oriented stockholder like BNSF with Warren Buffett, taking it completely private, or government financed capital programs a la CN prior to privatization.
Ackman told us this was coming months ago. He said that, with the uptick in CP’s stock price, which has almost doubled since Hunter Harrison came aboard, the railroad had his portfolio out of balance. This is probably true in spades today, with the bad luck Ackman’s company has had at J.C. Penney and elsewhere.
That consideration, and all the good reasons given by Paul North, make strong arguments for “taking some money off of the table,” as Jim Cramer is always urging us to do.
The announcement was made after he had already sold the shares, so it won’t affect the ongoing share price. If my math is right, this sale brings his total stake in CP down to just under 10%. This will greatly simplify his actions regarding CP from this point forward, in terms of reporting requirements. There is still money to be made, but it will begin to take Mr. Ackman out of the public eye.
Bruce
Ackman sold some of his shares in order to balance his portfolio. He still holds a significant number of shares in CP. He is to be commended for bringing Harrison and his protégé Keith Creel to CP. Harrison was great for the short term, but it is Creel (who is only in his mid 40s) who will lead CP to greater heights over the next decade. This is really the shot in the arm CP has needed for so long, and I have no doubt that the Company’s profit growth and cost management over the next year or two will bring the p/e ratio back in line with industry norms.
This will be great to watch. Never before have we in Canada had such great management teams at both railroads.
In many respects, all seven major railroads have excellent management teams, which is a condition that contrasts with much of the history. The Staggers act, highway congestion, shortage of competant truck drivers, North American oil production, liberalizatoin of Canadan-USA-Mexico trade barriers, and other factors have made railroading a growth industry again, attracting good management.
Very true Dave, looking at all of the big seven and the smaller regionals and shortlines too, they are now lead by very capable teams. That bodes well for the entire industry.
Are you kidding me? Like honest to god kidding me? CP in the States is in shambles. I have never seen more people fired in my entire life. Good railroaders to boot. The CN is reaping the benefits by cherry picking the best employees from the CP. You though Hunter at CN was bad? You should see the CP now. Guys are literally scared to lose their jobs over nothing. A few months ago a conductor in the cities got 30 days off for mixing up “EOT Number” and “Train ID” on an air-slip. THIRTY DAYS OFF! I believe every pre-Hunter Superintendent in the States has been terminated or “resigned”. I have never seen employees this scared in my life. Money or no money this is NOT how you run a company. Overlook one or two safety rules? Well thats a big ol investigation and probably 30-60 days off. Follow all the safety rules? Oh well that’s most certainly malicious compliance! Another investigation and probably 30-60 days off. Fear is not a way to run any type of business, and I dont care how much money you make.
I’d sure like to hear from cptrainman on this. The above looks to me like the s
Is talk of arbitrary firings true? I don’t know, I don’t have firsthand experience, but if so, the union needs to defend its members, that is one of its main purposes. We know from past experience that companies will invent reasons for firing workers.
The union does defend its members. But when arbitrary firings are rampant, the backlog of cases going to arbitration becomes excessive. You very likely do get your job back, but meanwhile you had to figure out how to live with no wages for 6-8 months or longer.
But that’s only for the masses. If you are a management friend of EHH, you can ignore the operating rules, cause a head-on collision with hazardous goods spilled into a river, and merely suffer a quick transfer to another territory.
John
That’s why most of us carry job insurance.
Jeff
Why do you say that? Why would "$800 million worth of shares on the market lower the market price of CP? Just wondering…
More people wishing to sell than wishing to buy would drive the share price down. Share price has been on the rise but the stock is currently overvalued relative to industry norms.
CP is a company in transition. There are going to be some changes and there will be some pain over the short term. Personally I think the top people need to get more buy in from the rank and file. Changes are easier when everyone has a view of the big picture and their role in it. I’ve been through layoffs and terminations also and agree its no fun. But it is what it is… the worst that can happen is that you’re thrown out of work… it’s not pleasant, but there are many things in life that are a lot worse.
I am by no means an expert on the Byzantine intricacies of the stock market, but here is my thinking:
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Supply and demand: all things being equal, if the supply of anything goes up, the price goes down, and he has added to the supply of CP stock available on the market.
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Psychology. You are investor, you think: why is this guy, who has insider knowledge and was responsible for hiring HHH, dumping stock? If things are going well you would want to hold onto it. “Diversifying my portfolio” is often sort of like “the dog ate my homework”: a throwaway excuse masking other reasons, and investors know it. Martha Stewart used “I’m diversifying my portfolio” as an excuse for dumping stocks she knew would decline, just prior to going to jail. It may or may not be the truth in this case, but when investors hear it it is taken with a grain of salt.
The stock market is a fickle thing. Word that someone was looking to dump $800M in shares might tend to cause some speculation as to why, which could negatively affect confidence in the company and the stock’s value.
Or not. Since it appears the sell-off has already occured, it could be that it did so “under the radar” with minimal, if any, effect.