The Public Sector Pension Investment Board (PSP) – one of the country’s largest pension fund managers – recently liquidated its equity investment in Montreal-based rail operator Canadian National (CN).
PSP, which is headquartered in Ottawa but has its main office in Montreal, sold nearly $100 million worth of CN shares this spring.
This decision seems to please PSP given the pressure observed on the stock over the past few months on the Stock Exchange. CN shares reached a peak of $181 in March on the Toronto Stock Exchange. They have since fallen by approximately 15% and are now worth $155 in Toronto. The stock has thus returned to its level of last November.
With a market value approaching the $100 billion mark, CN is by far the largest Quebec company on the Toronto Stock Exchange, ahead of Alimentation Couche-Tard, whose value is around $78 billion.
PSP had increased its stake in CN shares sixfold last fall and still owned 515,000 CN shares at the beginning of April.
A document filed by PSP in recent days with U.S. regulatory authorities reveals that the Public Sector Pension Investment Board no longer held any CN shares at the beginning of July.
The filing with the Securities and Exchange Commission does not specify exactly when the CN shares were sold in the spring or at what price.
It was not possible to obtain a reaction to understand the reasoning behind this investment decision from PSP management. “We appreciate the opportunity to comment, however, we will not comment,” we were simply told by email.
CN’s spring financial performance last month came in worse than expected, and management lowered its earnings-per-share growth forecast for fiscal 2024 to reflect “the impact of ongoing labor uncertainty on volume.”
While the wildfires in Western Canada and the performance of the economy may have fueled investor concern in recent months, the threat of a labour dispute in the country’s rail sector may also have affected sentiment. CN management had sent a notice to its unionized employee representatives last week to formally inform them of its intention to lock them out this week unless a settlement or binding arbitration was accepted. With no settlement reached in time, CN – and CPKC – operations have been at a standstill since early Thursday morning.
On Wall Street and Bay Street, the analyst community remains divided on CN. Of the thirty or so analysts who follow the company’s daily activities, less than half recommend buying the stock. Their average target price over the next 12 months nevertheless suggests an appreciation of about 15% compared to the current share price.
Total assets under management at PSP are approximately $265 billion.