Ancora Holdings, the activist investor that waged a proxy battle for control of a beleaguered Norfolk Southern in 2024, now may have CSX in its crosshairs.
“We’ve been a growing shareholder in CSX and I think that company finds itself at the crossroads … of whether it wants to find a merger partner or whether it’s going to have to go retool management,” Ancora Alternatives President James Chadwick said yesterday in an interview with CNBC’s Morgan Brennan.
Chadwick says that the railroad’s operational and financial performance has slipped under Joe Hinrichs, who became CEO in September 2022. Prior to his tenure, Chadwick notes, CSX had a sub-60% operating ratio. Today CSX’s 64.1% operating ratio trails the other four publicly traded Class I railroads.
CSX’s operating ratio increased 3.2 points year over year in the second quarter as unfavorable changes in traffic mix drove a revenue decline, while costs rose amid congestion and detours related to a pair of construction-related main line outages.
The second-quarter earnings, however, beat Wall Street expectations by about 5%. And the railroad recovered much faster than expected from congestion related to a string of harsh weather events and the Feb. 1 closure of the Howard Street Tunnel in Baltimore for a long-awaited clearance project. The railroad also is rebuilding its Blue Ridge Subdivision, which was heavily damaged by Hurricane Helene last fall and is not expected to reopen until this fall.
Former CSX Chief Operating Officer Jamie Boychuk, who was Ancora’s candidate to replace Norfolk Southern’s operations chief during the proxy contest, has been advising the Cleveland-based investor about CSX, Chadwick says.
Hinrichs tapped retired Canadian National Chief Operating Officer Mike Cory to replace Boychuk in September 2023.
Brennan asked Chadwick if Ancora would agitate for management change at CSX. “That will be up to CSX ultimately,” Chadwick replied. “Whatever actions they make from here will dictate what we do.”
CSX declined to comment today.
Ancora has been pleased with Norfolk Southern’s performance and is buying additional NS stock, Chadwick says. He praised the railroad’s leadership, strategy, improved safety metrics, and strong board. “Now they’re running a PSR railroad, which they weren’t before, and you can see it manifested in their improving O.R. and improving results,” Chadwick says, referring to the low-cost Precision Scheduled Railroading operating model.
Ancora failed to wrest control of Norfolk Southern and oust CEO Alan Shaw, but three of its board candidates did win election to the railroad’s board. And in November 2024 the railroad and activist investor reached a settlement agreement.
Ancora supports the proposed Union Pacific-Norfolk Southern merger, Chadwick told CNBC.
Are these the modern, railroad version of Texas Air, who destroyed PeoplExpress and Eastern by buying them up and literally flying them into bankruptcy?
As a stockholder and many-decades observer of the rail industry, I’d like to respectfully give Ancora management some advice: truly, please, with all the respect one can muster, I beg you to sit down and close your mouths. Heaven forbid you show some maturity by being patient. (I know, that’s a really bad word on Wall Street). Two of CSX’s key north-south routes are CLOSED right now – and it’s very TEMPORARY. CSX remained the best-operating railroad in the country well after boom-boom Boychuk’s dismissal – until the Howard Street project started and seemingly all the rain in the world was dumped on the Carolinas over two days last fall. It’s going to get back to normal, but if you start screwing around with CSX, it’ll cause chaos. And then you’ll point fingers that, in reality, should be pointed right back at you.
Here come the vultures!
Here we go again.
Yet more vampires trying to extract blood.
How much is enough? Are they going to hire more Magnum PI’s to dig up some dirt on CSX execs?
The hedge fund with the most holdings when they die wins. What happens when there are no more turnips to squeeze? You might actually have to invest in something that *makes something*. Heaven forbid.
“Here we go again” was my thought as well when reading the article, bringing back memories of when “The Children’s Fund” was trying to bully CSX in 2007.
I would love to see the “hedge funds” restricted or outlawed…look what they did to Southwest Airlines.
Another example of why nationalization is the only solution.
Another example of a post that makes no sense to me.
NOW A QUESTION —- Am I the only person who can’t sign onto TRAINS PRO? I’m posting this question on this article b/c it’s the only article I can get on to. I have tried everything … using my password, changing my password, getting a new password …..
Is it me or is it this (revised) web site?
Much as I love Trains Magazine, I’ve had trouble with trains.com for a long time.
Charles, we’re having some technical issues with the site as a result of the changes. I’ve been passing on the word to our IT people that people are having problems. I addressed this a bit more in the comments on the story about the launch of Trains Pro: https://www.trains.com/pro/freight/trains-magazine-launches-trainspro-website/
We apologize for the issues and are working to correct them. — David Lassen, senior editor, Trains
Hello Charles.
NO you are NOT the only person having this trouble. It is the website (or more accurately the clowns who pass themselves off a programmers who created this abomination,) that is to blame, not you.
Apparently, Whoever Kalmbach hired to write this warm, steaming heap in turn hired the folks responsible for testing Microsoft products to do the testing here.
Sad, really.
Besides the obvious activist money grab, there’s a smell of petty revenge here. Jamie Boychuk was duly fired by CSX, and you’d be hard pressed to find anyone in the rail industry to say a good word about him.
They smell money. We all do at this point.
The people at Ancora may be certifiably insane to ignore floods and a mega-project on hold for decades to just make a claim CSX’s financials are bad.
On CNBC Chadwick really didn’t talk about much more than how much return on investment they’re getting for UP buying them out. No one’s calling it a merger. They’ve bled NS to an empty husk and are jumping off.
Naturally, with UP-NS, CSX has a target on its back. I trust Joe Hinrichs and his team to guide CSX, not some activist investor group which has zero interest in what the railroad actually does.