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.
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