Ackman: J.C. Penney Company, Inc. (JCP), Herbalife Ltd. (HLF), Canadian Pacific Railway Limited (USA) (CP)

In Canadian Pacific for the long-haul

Canadian railroad giant Canadian Pacific Railway Limited (USA) (NYSE:CP) has been one of Ackman’s biggest wins in recent years. After installing a new CEO last year, Canadian Pacific Railway Limited (USA) (NYSE:CP) shares are up better than 60%.

Pershing Square trimmed some of its investment in the railroad last quarter, but Ackman writes that it sold stock simply to balance the portfolio. In light of the large appreciation, Canadian Pacific Railway Limited (USA) (NYSE:CP) accounted for almost one-third of Pershing Square’s capital. Ackman reaffirmed his commitment to the company, writing that turnaround is just beginning to take place, and that Pershing Square is in for the long haul.

That seems reasonable. Pershing Square makes big bets, but with so much capital invested in just one stock, a black swan event could’ve blown up the fund.

With Ackman reaffirming his commitment, it should be good for Canadian Pacific Railway Limited (USA) (NYSE:CP) shareholders. When Ackman began to trim his stake, some analysts saw it as a sign that the top was in. RBC, for example, downgraded the stock in June and cut its price target to $104 based largely on Pershing Square’s sales.

Investing alongside Pershing Square

Ackman has had some impressive home runs in recent years (Canadian Pacific, General Growth Properties, Fortune Brands) but he’s also had some big losses (J.C Penney, Borders, Target).

In this case, Ackman has accepted his failure with J.C. Penney Company, Inc. (NYSE:JCP), and is preparing to unload his shares. On paper, Herbalife Ltd. (NYSE:HLF) also looks like a failure, but Ackman continues to be as adamant as ever about the company’s problems. As for Canadian Pacific Railway Limited (USA) (NYSE:CP), it’s been a great investment, but Pershing Square isn’t selling out yet.

One thing’s for certain: whenever Pershing Square gets involved in a stock, it’s going to move. For that reason, investors holding stocks that Ackman is involved in, need to keep a close eye on the fund’s activities.

The article Ackman Abandons J.C. Penney, Presses Herbalife Short and Reaffirms Canadian Pacific originally appeared on Fool.com and is written by Sam Mattera.

Sam Mattera has no position in any stocks mentioned. The Motley Fool has the following options: long January 2015 $50 calls on Herbalife Ltd. (NYSE:HLF).

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