Top 5 Stock Picks of Matthew Halbower’s Pentwater Capital Management

3. Kansas City Southern (NYSE:KSU)

Pentwater Capital’s Stake Value: $574.6 million

Percentage of Pentwater Capital’s 13F Portfolio: 5.83%

Number of Hedge Fund Holders: 59

Kansas City Southern (NYSE:KSU) was a railroad holding company that had operations in the United States, Mexico, and Panama. The company was acquired by Canadian Pacific Railway Limited (NYSE: CP) in December 2021, for a transaction worth $31 billion.

As Q3 2021 came to an end, Mr. Halbower’s Pentawater Capital owned 2 million Kansas City Southern (NYSE:KSU) shares for a $574 million stake that constituted 5.83% of its portfolio. Out of the 867 hedge funds polled by Insider Monkey during the same time period, 59 had owned the rail holding company’s shares.

For its third fiscal quarter, the last before the acquisition, Kansas City Southern (NYSE:KSU) reported $744 million in revenue and $1.71 in diluted EPS.

Kansas City Southern (NYSE:KSU)’s largest investor was Michael Larson and the Bill & Melinda Gates Foundation Trust through a $592 million stake via 2.1 million shares.

Miller/Howard Investments mentioned the company in its Q1 2021 investor letter. It outlined that:

“Canadian Pacific Railway (CP) agreed to acquire Kansas City Southern (KSU) in the largest rail deal in over a decade. The merger will create the first rail network connecting Canada, the US, and Mexico, and it should benefit from the passage of the USMCA Trade Agreement. We initiated a position in KSU in Q4 as we expected it to benefit from growing North American trade and viewed it as a consolidation candidate.”