The Successful Investor Hotline – Friday, June 7, 2013

Article Excerpt

CANADIAN PACIFIC RAILWAY LTD., $129.16, Toronto symbol CP, fell 6% this week after activist investor Pershing Square Capital Management announced that it will sell 7 million of its CP shares over the next year. Pershing holds 24 million CP shares, or 14.2% of the total outstanding. In June 2012, Pershing helped install Hunter Harrison as CP’s chief executive officer. Mr. Harrison is the former CEO of Canadian National Railway (Toronto symbol CNR). Under his leadership, CP has improved its efficiency with new locomotives, upgraded tracks and software that optimizes train loads and speeds. The company is also cutting 25% of its workforce over the next two years. In the first quarter of 2013, CP’s operating ratio improved to 75.8% from 80.1% a year earlier. (Operating ratio is calculated by dividing a company’s regular operating costs by its revenue. The lower the ratio, the better.) CP aims to cut its operating ratio to around 65% by the middle of 2016. Thanks to this plan,…