March 20, 2013
CANADA doesn?t have much in the way of a founding myth. The completion in 1885 of the Canadian Pacific railway?which the colony of British Columbia made a condition for joining Canada instead of the United States?is about as good as it gets.So when Pershing Square Capital, a hedge fund from New York, took control of the iconic railway last May and installed an American boss, it brought public attention to the feeblest of the six big North American railways. Sceptics feared that William Ackman, the fund?s brash principal, would ruin a piece of Canadiana by extracting as much profit as possible while failing to invest for the long term. The deal?s proponents, including many of the country?s biggest pension funds, retorted that Canada?s sleepy, clubby business elite could use a shake-up.
In January the railway released its financial results for 2012, giving new ammunition to both sides. The best news was that freight revenue had increased sharply. The growth of new forms of energy (such as shale gas) has boosted railways, which are needed to bring in pipes, timber and drilling sand. They are also used to ship out crude oil from areas like the Bakken Shale and from...
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