NEW YORK (AP) - Activist investor William Ackman and his affiliates have bought a 12.2 percent stake in Canadian Pacific Railway Ltd.
Documents filed with the Securities and Exchange Commission on Friday show Ackman, his hedge fund Pershing Square Capital Management and related entities bought 20.7 million shares in the Calgary, Alberta, company between Sept. 23 and Thursday.
The railway's shares surged 7 percent in after-hours trading.
The filing says Ackman believed the shares were undervalued and an attractive investment. By Friday's close, the shares had risen 43 percent from a low of $44.92 in September.
The filing says Ackman expects to engage in discussions with company leaders and shareholders.
The railroad reported this week that its third-quarter net income fell 5 percent as higher fuel costs pinched profit margins.
For the three months ended Sept. 30, the company earned 186.6 Canadian dollars, ($179.1 million), or CA$1.10 per share, compared with CA$197.3 million, or CA$1.17 per share, during the same period last year.
The company said its net income was CA$1.14 per share when excluding one-time charges for debt payments.
Revenue for the quarter rose 4 percent to CA$1.34 billion from CA$1.29 billion.
The company's average fuel price rose 47 percent from the same period a year earlier.
U.S.-traded shares in Canadian Pacific Railway rose $4.42 to $68.99 after hours. They added $2.67, or 4 percent, to end regular trading at $64.57.