CP Rail (Symbol-CP)

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pitz
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CP Rail (Symbol-CP)

Post by pitz »

Any thoughts? The Q1 numbers were extremely impressive, with good guidance. The P/E on a forward basis, according to guidance is 16.8. And the railway should continue to benefit from an acceleration in shipments by rail due to the energy crisis and a growing Canadian appetite for Chinese-imported goods.

Or is CNR a better deal overall?
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Post by IdOp »

I own it and will continue to hold some of it, but am looking to reduce, only because it is getting to be too big in my portfolio. I bought some just under $33, sold 1/3 around $52. It's not as cheap as it once was, but valuation still looks lower than CNR to me. What I like is that their operating ratio is improving and has lots of room to continue to improve, if CNR is any guide. It's supposedly more cyclical so that is something to watch out for.
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Post by biker »

RBC Direct Investing TM. would like to inform you that the following New Issue has just been announced.

Canadian Pacific Railway Ltd.

Short Description:
Price: $36.75 CDN per share.
Settlement: February 10, 2009.
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Post by sweedy »

biker wrote:RBC Direct Investing TM. would like to inform you that the following New Issue has just been announced.

Canadian Pacific Railway Ltd.

Short Description:
Price: $36.75 CDN per share.
Settlement: February 10, 2009.
Damn it. Should have sold today.
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Re: CP Rail (Symbol-CP)

Post by Taggart »

Ever since Ackman has been after CP, I kept asking myself, what's in it for him? Even more so since I'm part way through reading "The Strategic Dividend Investor" where the author really takes a tongue lashing at Wall Street. I've never owned CP, so don't have any grievance, but I am sick of the liars who make out that they're doing investors a big favour.

-----------------------------------------------------

Well, David Olive of the Toronto Star takes Bill Ackman to task:

CP Rail activist Bill Ackman won’t deliver on his promises to turn CP around

Last two paragraphs:

"If I was Ackman, my plan would be to noisily celebrate Thursday’s victory as long as possible, creating the impression of dynamic change at CP. (CP shares have already soared about 60 per cent since Ackman merely appeared on the scene last fall.) And I’d count on publicity hound Harrison to tout every operational improvement, though he’d most likely be working from the same $1.2-billion overhaul plan that Fred Green unveiled in January.

Then I’d pocket my winnings and leave behind a new governance team at CP no better able to generate the outsized returns Ackman has been demanding than the team it replaced. There’d be no such windfall for the long-term pension managers who supported Ackman — and the retirees they represent — as CP stock settles back into its stagnation of years past after a temporary bounce. That’s how high finance works for us 99 percenters."

-------------------------------

Also be sure to read the two comments (so far) from readers at the bottom of the page.
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Re: CP Rail (Symbol-CP)

Post by Peculiar_Investor »

Long rumoured and now apparently fact, CP Rail is making a merger play: CP Proposes Business Combination to Norfolk Southern
Canadian Pacific (TSX:CP) (NYSE:CP) today announced that it has sent an offer letter to Norfolk Southern Corp. (NS) proposing a business combination that would create a transcontinental railroad with the scale and reach to deliver improved levels of service to customers and communities while enhancing competition and creating significant shareholder value.

The proposal, which includes a sizable premium in cash and stock offered to NS shareholders, would result in a company with the potential for faster earnings growth than either CP or NS could achieve on their own, all the while maintaining a strong investment grade credit rating.
It didn't take long for the details and commentary to appear, Canadian Pacific's Underwhelming Bid - Bloomberg Gadfly
Canadian Pacific may want to rethink its definition of sizable.

The $21 billion railroad operator said Tuesday that it had approached Norfolk Southern with an offer to buy the company for a "sizable premium" in cash and stock. Norfolk Southern shed some light on the terms a few hours later: $46.72 in cash and 0.348 of a Canadian Pacific share, or about $95 a share.

Sizable? The offer on the table -- which Norfolk Southern says it's evaluating -- works out to about a 20 percent premium to the stock's average price before Bloomberg News reported last week that Canadian Pacific was exploring a deal. The biggest North American railroad deals of the last decade have commanded an average premium of about 23 percent (admittedly, it's a small pool).
And Norfolk's reply isn't surprising either, check out the title of their news release. Norfolk Southern Board of Directors to evaluate unsolicited, low-premium, non-binding and highly conditional indication of interest from Canadian Pacific | News | Norfolk Southern
Norfolk Southern Corporation (NYSE: NSC) (“the Company”) today confirmed that it has received an unsolicited, low-premium, non-binding, highly conditional indication of interest from Canadian Pacific (CP.TO) to acquire the Company for $46.72 in cash and a fixed exchange ratio of 0.348 Canadian Pacific shares per Norfolk Southern share, representing a premium of less than 10% based on closing prices today.
Let the dance begin.
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Re: CP Rail (Symbol-CP)

Post by brad911 »

I haven't held CP for a while now and don't really see a compelling driver for value with this either.
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Re: CP Rail (Symbol-CP)

Post by Peculiar_Investor »

As part of yesterday's Q4 press releases, CP reports record low operating ratio for fourth quarter and full year amid challenging conditions they also announced Keith Creel to become CEO of Canadian Pacific; E. Hunter Harrison to retire.

Take that "retire" with a huge grain of salt. (I bolded a couple of key points)
CP Rail wrote:Canadian Pacific Railway Limited (TSX: CP) (NYSE: CP) announced today that Keith Creel will become President and Chief Executive Officer of the company effective January 31, 2017 following E. Hunter Harrison's decision to retire from CP.

Mr. Harrison will take vacation leave effective immediately until January 31, 2017, and Mr. Creel will assume the CEO's responsibilities during this period.

<snip>

Mr. Harrison had approached the Board to discuss his retirement from CP and potential related modifications to his employment arrangements that would allow him to pursue opportunities involving other Class 1 Railroads.

<snip>

Under the terms of the separation agreement, CP has agreed to a limited waiver of Mr. Harrison's non-competition obligations. In consideration of the waiver Mr. Harrison has agreed to terminate all roles he has with CP and forfeit substantially all benefits and perquisites he is entitled to receive from CP going forward, including his pension. In addition, Mr. Harrison has agreed to surrender for cancellation all of his vested and unvested equity awards, except for a portion of his vested options he was granted upon arrival at CP in June 2012.

<snip>

The previously-agreed consulting agreement between CP and Mr. Harrison will not take effect and Mr. Harrison will not be providing any consulting or other services to CP following his retirement. CP has also reinforced Mr. Harrison's non-solicitation obligations with respect to senior CP employees. Mr. Harrison has agreed to sell all of his CP shares by May 31, 2017. CP will have no role in Mr. Harrison's future endeavours.​
CP should know all about the solicitation of senior employees, after all isn't that how Mr. Creel came to CP from CNR? CP Rail, CN Rail: The inside story of how Keith Creel was won | Financial Post.

So we now have Hunter Harrison, ex of CNR and now also ex of CP Rail. As to the "pursue opportunities involving other Class 1 Railroads.", that cats out of the bag too. He's got a new target Outgoing CP Rail CEO Said to Team With Activist to Take on CSX - Bloomberg.
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Re: CP Rail (Symbol-CP)

Post by westcoastfella »

US railroads up quite a bit today: NSC up 4.5% today (I own), and CSX up nearly 15%, others between 1-3%. Speculation that he'll get involved in CSX and look for other mergers from there.
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