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 (NASDAQ: 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 Wednesday in an interview with CNBC.
Chadwick said that the railroad’s operational and financial performance has slipped under Joe Hinrichs, who became chief executive in September 2022. Prior to his tenure, Chadwick noted, CSX had a sub-60% operating ratio. Today CSX’s 64.1% operating ratio trails the other four publicly traded Class I railroads.
The 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 in late 2024 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 said.
Hinrichs tapped retired Canadian National Chief Operating Officer Mike Cory to replace Boychuk in September 2023.
When asked if Ancora would agitate for management change at CSX, Chadwick said, “That will be up to CSX ultimately. 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 said. 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 OR and improving results,” Chadwick says, referring to the lower-cost Precision Scheduled Railroading operating model.
Ancora failed to wrest control of Norfolk Southern (NYSE: NSC) 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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