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Hedge fund manager William Ackman

© Shannon Stapleton / Reuters/Reuters

Hedge fund investor Bill Ackman apparently isn't buying the idea that Canadian Pacific Railway Ltd. is doomed to underperform rival Canadian National Railway Co. because of a rail system burdened by steeper tracks through the mountains of western Canada.

In his third-quarter letter to his investors, Mr. Ackman doesn't say much about his recent investment in Canadian Pacific CP-T , but what he does say signals that he believes that the issue is more with how the company is run than bigger factors that are out of its control, such as the track network.

"On nearly every operating measure, CP underperforms its closest competitor Canadian National Railway Company as well as the other North American railroads," Ackman wrote to his investors. "We believe the discrepancy in performance at CP is generally not attributable to structural factors and can largely be resolved."

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Just how? Mr. Ackman is in talks with CP after buying 12.2 per cent of the company, and he's not saying in the meantime what he has in mind.

"We look forward to providing more information about this investment as soon as it is appropriate."

(The full letter is available here but there's not much more on CP.) To make money, all Mr. Ackman has to do is narrow the gap between CN and CP, not close it entirely, as the Globe's Fabrice Taylor points out.

That's obvious to every one, not least CP's management, which is already trying to shrink the discrepancy with a plan to make its trains move faster.

It must be obvious to Mr. Ackman too, and it may well be that in his talks with management, Mr. Ackman is trying to look activist, when in reality his investment is more about canny timing.

As pioneering activist Robert Chapman is fond of saying, the best time to be an activist is when the target has already decided to get going on change. At that point, "it's like standing outside at 5 a.m and demanding the sun to rise."

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