TORONTO, June 3 (Reuters) - Pershing Square Capital Management said on Monday that it plans to sell up to 7 million shares of Canadian Pacific Railway Ltd over the next six to 12 months because the soaring stock now represents more than one quarter of its fund assets.
Pershing Square Chief Executive Bill Ackman, who waged a bitter proxy battle to overhaul Canada’s No. 2 railway last year, said the hedge fund expects to remain CP’s largest shareholder even after it sells a portion of its 24.1 million shares.
Pershing partners Ackman and Paul Hilal, who were elected to CP’s board last May after successfully nominating an alternative slate of directors, said they will remain on CP’s board. Ackman’s hand-picked choice to lead CP, railway turnaround veteran Hunter Harrison, was appointed CEO of the company last June.
“Thanks to Hunter Harrison’s and the CP team’s performance over the last nearly one year, Canadian Pacific’s share price has more than tripled since we first invested in CP,” Ackman said in a statement.
“As a result, our stake in CP has grown to approximately 26 percent of the combined assets of our funds. Given that increased concentration, portfolio management considerations have driven our decision to trim our holdings.”
Pershing said it plans to limit sales of its CP shares to unsolicited brokers’ transactions and no more than 10 percent of the combined volume on the New York and Toronto stock exchanges on any day of trading.
In a letter to shareholders last April, Pershing said it was highly motivated to maximize shareholder value, given that its stake was worth more than $1.8 billion and represented one-sixth of its assets.
Pershing Square held 13.8 percent of Canadian Pacific as of March 31, according to Thomson Reuters data.
Shares of CP fell C$2.34 to close at C$135.50 on the Toronto Stock Exchange and lost 12 cents to end at $131.87 on New York before Pershing announced its plans.