UPDATE 1-Billionaire Ackman trims CP railway stake, adding to fund's cash pile

Thu Oct 24, 2013 7:13pm EDT
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By Svea Herbst-Bayliss and Euan Rocha

BOSTON/TORONTO Oct 24 (Reuters) - Billionaire investor William Ackman announced on Thursday that he sold 6 million shares in Canadian Pacific Railway Ltd after a huge run-up in the stock, adding a large pile of cash to his $11 billion hedge fund.

Just over a year after winning a proxy fight and installing a new chief executive at Canada's second-largest railway, the sale will add roughly $800 million to Ackman's Pershing Square Capital Management fund.

Even after the sale, Pershing Square will remain Canadian Pacific's biggest shareholder with a 10 percent stake and Ackman and Paul Hilal, a Pershing Square partner, will stay on the company's board.

Ackman said in June that he would sell 7 million shares after the stock's strong gains had ballooned the position in his fund.

While Ackman had projected the planned sales to take up to 12 months, calls from analysts and other investors to hasten the exit prompted Pershing Square to sell all at once in a public offering with the help of three Wall Street investment banks - Credit Suisse, Bank of America Merrill Lynch and Morgan Stanley.

Analysts said some investors had expressed concerns that the share price, which has surged 13.62 percent in the last month alone, could be hurt by expectations of Pershing Square's trickling sales, so the move to sell fast made sense.

The hedge fund, which made a $2 billion profit on Canadian Pacific in less than two years, had already sold 1 million shares over the last four months.   Continued...