Same vecchie stronzate stanche, different railroad. This time, it’s CSX. In my humble opinion, it’s non funzionerà, because we’ve seen these tactics before, at Norfolk Southern: Circle the target, buy a bunch of shares, then proceed to buttarci addosso della merda, trashing the CEO and twisting or fabricating numbers while you’re at it.
Yes, folks, Ancora Holdings, the endless-loop tape (like those junky telephone answering devices I used to sell at Radio Shack back in the 1970s), has resurfaced at CSX with basically the same playbook. I’ll give Ancora credit for placing three solid board members—Gil Lamphere, Sameh Fahmy and William Clyburn Jr.—at Norfolk Southern. But that’s about all they managed to do, thankfully. The way they distorted the CSX vs. NS operating comparisons during the 2023 NS proxy battle was “extremely unprofessional,” one highly respected analyst remarked to me. As for the CEO they trashed and failed to oust, Alan Shaw, he sadly wound up opening and falling out his own exit door. Nothing to do with Ancora.
It appears there are two other hedge funds interested in CSX. TOMS Capital Investment Management (which as far as I know is not affiliated with Tom’s of Maine, purveyor of environmentally friendly, aluminum-free deodorant and other personal hygiene products), has taken a small financial position in CSX, as did Third Point Capital. I don’t know much about either, nor do I know their intentions. According to Reuters, “Unlike some activist investors, [TOMS Capital] prefers to stay in the background and push for changes out of the limelight, rather than launching public and noisy campaigns.” According to Institutional Investor, “Once famed for [Chief Executive Officer and Chief Investment Officer] Dan Loeb’s blistering activist letters, Third Point is now quietly reshaping itself into more of a credit-driven manager.”
Now it’s Joe Hinrichs Ancora is trashing. Here are a few slimy, silly, fundamentally fabricated, intrinsically insulting samples:
- “According to statistics from the Surface Transportation Board and Ancora’s analysis, Mr. Hinrichs has literally overseen CSX going from first to worst in terms of operational performance among Class I rails.”
- “Aside from bolstering employee engagement, making use of the Company’s private planes and manicuring his social media footprint, we are hard pressed to find any real accomplishments tied to Mr. Hinrichs.”
- “In recent years CSX, has seen a massive increase in Operating Ratio, from 58% when Mr. Hinrichs joined in 2022 to 67% year-to-date 2025.”
- “Mr. Hinrichs seems to have built a leadership team of junior varsity executives. For example, we believe COO Mike Cory is a mediocre operator and was likely pushed out of his prior role at [CN].”
- “Regulators will have a much easier time reviewing multiple rail mergers at once. From a practical perspective, they will be able to compare competitive considerations and the impact on customers on a side-by-side basis to determine how the respective combinations benefit all stakeholders. From a timeline perspective, getting something done as early as possible during the pro-business [POTUS 47] Administration should also be a priority.”
The STB will not have an easier time dealing with two mergers. If anything, it will complicate things, potentially dragging them out.
Care to read Ancora’s entire now-not-so-private letter? I’ve attached it below. Download and read it if you have nothing better to do with your valuable time. Spoiler alert: It’s mostly, as my Uncle Alberto used to say, a bunch of malarky. You may find it maddening. You may laugh out loud. You may want to have an airline “barf bag” handy. The only maddening thing is that some people will actually believe Ancora’s stronzate.
Think I’m just blowing smoke here, or letting off steam? Here’s what Citi has to say about the situation (bold emphasis mine):
“The Ancora letter to CSX strikes us as unnecessarily aggressive, possibly counterproductive: Ancora Holdings released a letter to CSX’s Board on Aug. 19 urging the company to pursue a merger and/or consider terminating its CEO Joe Hinrichs. We find this letter a bit confounding, given: 1) its aggressive tone, which we believe is largely unwarranted; 2) its timing, as CSX has been showing improvement on the service issues that impacted the company earlier this year; 3) Ancora’s relatively small holdings, which we calculate as less than 0.2% of CSX shares outstanding; 4) what appears to be a misrepresentation of certain facts; 5) its suggestion that CSX faces ‘permanent impairment of value’ if it does not act imminently; and 6) the suggestion that CSX has not been open to strategic alternatives.
“By pushing CSX to be a forced seller, we worry that Ancora risks deteriorating CSX’s negotiating position. We believe a patient approach is likely more prudent. Ancora claims are somewhat difficult to reconcile with reality As part of its letter, Ancora claimed that CSX has delivered “anemic shareholder returns,” but we calculate CSX as tied for the best share-price performance among Class I rail peers since September 2022 when current CEO Hinrichs joined the company. While we recognize that part of these gains have come in recent months as speculation has increased that CSX could be a takeout candidate, its shares have performed in-line with peers for much of the past few years. Meanwhile, underperformance for rails vs. the S&P 500 has largely been due to a broader freight recession that has impacted transports broadly, as we view CSX and other transport companies as well positioned for when macro conditions inflect.
“Additionally, whereas Ancora expresses ‘great respect’ for CSX Vice Chairman Paul Hilal, it is concerned with the Board’s ‘poor judgment … and undermining shareholders best interests,’ We find these claims somewhat contradictory, as we believe Mr. Hilal (an experienced investor whom we also hold in high regard) would likely have good intuition on the best avenues to maximize shareholder value.
“On its most recent earnings call, CEO Hinrichs explicitly noted: ‘We are absolutely focused on delivering shareholder value and are always open to anything that can help us achieve this objective.’ This leads us to believe that the reason CSX has not publicly announced an exploration of strategic alternatives is because it needs a willing ‘dance partner,’ and alternatives are limited—with its principal merger alternative (BNSF) and a second, less likely partner (CPKC) making limited public comment, even as we remain highly confident the companies are considering their strategic options behind closed doors.
“Patience may be the better approach. With a merger process that is expected to take about18 months, we are inclined to disagree on the immediate urgency of CSX pursuing strategic alternatives. CPKC CEO Keith Creel has already committed to be a ‘loud voice’ in the STB review of UP+NS, noting regulatory approval is far from certain, with myriad concessions and carveouts potentially on the table. Additionally, if the STB does approve UP+NS, it would likely trigger a wave of further rail industry consolidation, in which CSX would be a desirable asset. Post-merger, CSX would continue to own highly valuable land and track, which would continue to hold appeal to BNSF.
“We believe rail shippers would be highly incentivized to ensure that CSX remains a viable competitive alternative in the East. As such, we believe an equally prudent course of action for CSX may be to bide its time and see what concessions it can extract as part of the STB review process and/or observe the extent to which the STB is even open to transcontinental mergers (a proposition that remains untested). Whereas pursuing a merger may ultimately prove the right course of action, we are struggling to see how turning CSX into a forced seller would be the best course of action, other than perhaps for investors with very short-term investment horizons.”
“Short-term investment horizons” indeed. Our industry is at a critical point. Some would call it a tipping point. Those of us who truly care about it—not the Ancoras of the world—must unite and stay focused. Tune out the noise. Avoid drowning in the swamp, or getting snared in prickly hedges.
Much of this smells, badly. So what’s Ancora’s point? Driving up the stock price? Lining its pockets? Satisfying some primitive urge, expanding its territory by marking it, like a dog?
Woof!
