Billionaire investor Bill Ackman reveals a $1.2 billion bet on Canadian Pacific Railway

• Bill Ackman's Pershing Square is betting big on Canadian Pacific Railway.
• The investor's hedge fund owned 2.8 million shares worth about $202 million at the end of December.

Bill Ackman's Pershing Square disclosed a new stake in Canadian Pacific Railway this week, heralding the firm's return to one of its most successful bets ever.

The billionaire investor's hedge fund owned 2.8 million shares worth $202 million on December 31, a Securities and Exchange Commission filing revealed on Monday.

Pershing Square is now exposed to about 14.8 million shares — worth around $1.2 billion — through stock it holds and forward contracts it intends to exercise, a spokesperson told Insider. The enlarged position was first reported by The Wall Street Journal.

As an activist shareholder, Ackman successfully pushed Canadian Pacific to overhaul its board and appoint a new CEO in 2012. He sold his stake in 2016, pocketing about $2.6 billion in profits for his firm, according to Forbes.

"One of our greatest investment regrets was selling CP a number of years ago," Ackman said in an emailed statement to Insider. "We are delighted to again be an owner of this remarkable and growing franchise at a time when transcontinental rail infrastructure could not be more important for our economy and our continent."

Ackman may be hoping to emulate Warren Buffett's success in the railroad industry. Buffett's Berkshire Hathaway conglomerate owns the BNSF Railway, which generated a record $6 billion in earnings last year.

The 91-year-old investor lauded BNSF as an "indispensable asset" and the "number one artery of American commerce" in his latest shareholder letter, and predicted it would still be one of Berkshire's crown jewels in a century's time.

Ackman has made significant changes to his stock portfolio during the pandemic. He built a $1.1 billion stake in Netflix in four days in January, swapped Starbucks for Domino's Pizza in the first quarter of 2021, and exited Berkshire in the second quarter of 2020.