Pershing Square

In two thousand and eleven, Bill Ackman spent one point four billion dollars buying fourteen percent of Canadian Pacific Railway. The railroad was bloated — operating ratio stuck above eighty three percent, meaning eighty three cents of every dollar went to costs. Ackman installed Hunter Harrison as chief executive. Harrison had turned around two railroads before. He started cutting. Within five years, the operating ratio dropped to sixty one percent. The stock went from sixty dollars to over two hundred and twenty. Ackman's position made two point six billion dollars in profit. The playbook was simple: buy a large enough stake to get board seats, install operators who know how to fix the business, then wait for the market to reprice the stock. Ackman runs eight to twelve positions at a time across sixteen to eighteen billion dollars. Management fees of one point five percent generate two hundred and fifty million a year regardless of performance.