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While CP Rail's board is locked in a proxy battle with hedge fund manager Bill Ackman, the struggling rail operator's second-largest shareholder has quietly boosted its stake in the company. Artisan Funds, a Milwaukee-based investment management firm, announced in a recent filing that it has increased its stake in CP Rail to 5.2 percent from 4.64 percent.
In the filing, the firm said the move was not part of a coordinated effort with Ackman's Pershing Square to push for executive changes at CP Rail.
"…the securities referred to above were acquired and are held in the ordinary course of business and were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of the issuer of the securities and were not acquired and are not held in connection with or as a participant in any transaction having that purpose or effect," it said.
The move by Artisan Funds comes as the proxy battle between Pershing Square and CP Rail heats up. On Monday Ackman's team and Hunter Harrison -- the former CEO of rival CN Rail who Ackman wants to take the helm at CP Rail -- presented their plans for CP Rail to the public.
Ackman's Pershing Square has amassed a 14.2-percent stake in CP Rail.
Analysts at CIBC said in a note to clients that while Ackman's and Harrison's plan to improve operating metrics at CP Rail may take longer then they expect, they at least mark a new period for the rail operator.
"We are increasing our price target from $77 to $82 (keeping our 'Sector Perform' rating)," Jacob Bout said. "While it is unclear if Pershing Proxy Battle will be successful (or that it will come down to a showdown in May), what is clear is that change is likely and that CP's operational underperformance is finally being addressed."