Wondering why Canadian National Railway shares are flying when it's Canadian Pacific Railway that's the takeover target? Investors aren't confused. The jump in CN's price on Wednesday - the stock was up 5 per cent - reflected an age-old practice known as rotation, which see portfolio managers dump one stock from a sector, in this case CPR, and shift their holdings to a rival with greater perceived upside. It was a trade the analyst community whole-heartedly encouraged. Fundamental-focused fund managers, who still count for a great deal of market activity, behaved just the way you'd expect on Wednesday. When CPR shares began trading, after the railway confirmed that Brookfield Asset Management had made overtures, the stock instantly soared by 15 per cent, trading through the day between $88 and $91, a premium to any valuation based on rational measures such as price-to-earnings ratios. So the fundamental types sold, and the hedge funds rushed in, and more than 7.8 million CPR shares changed hands. While many dealers hid their buying and selling by sending it through the Toronto Stock Exchange's "anonymous" brokerage account, TSX data shows TD Securities and National Bank Financial as leading traders of CPR stock. In simple terms, CPR sellers had $690-million to re-invest on Wednesday. Many of the fundamental types holding this cash decided that they still liked the idea of owning a railway. There's good reasons for taking this view, as global demand for Canadian resources is rising, and freight trains these goods, along with improving cash flow and an industry-wide move to give cash back to shareholders. So as they sold CPR, a great money managers simply poured their money right back into railways by adding CN to their portfolios.