A committed campaigner could potentially focus on CSX corporation, arguing for change due to reported financial decline.
In a recent development, Ancora Holdings, the activist investor known for its 2024 proxy battle at Norfolk Southern, has set its sights on CSX Corporation. The shift in focus is due to concerns over the railroad's declining operational and financial performance under CEO Joe Hinrichs, who took the helm in September 2022.
According to James Chadwick, President of Ancora Alternatives, the operating ratio at CSX has worsened from under 60% before Hinrichs to 64.1%, lagging behind other Class I railroads. This increase by 3.2 points year-over-year in Q2 2025 is primarily attributed to unfavourable changes in traffic mix and rising costs due to congestion and construction-related outages. Despite these challenges, CSX’s Q2 earnings beat Wall Street expectations by about 5%, and the railroad has recovered faster than expected from weather-related and infrastructure disruptions.
Under Hinrichs' leadership, CSX's financial performance has slipped compared to prior years, as reflected in the higher operating ratio and operational difficulties, which are central to Ancora's concerns. Ancora is considering whether CSX should seek a merger partner or change management to improve performance.
Meanwhile, industry analysis suggests that CSX could be involved in potential merger scenarios with Union Pacific, a move that some investment advisors view as a more likely path for structural improvement among Class I railroads. This indicates investor pressure for fundamental change within the rail industry, including CSX.
Ancora, however, supports the proposed Union Pacific-Norfolk Southern merger. The investment firm has expressed satisfaction with Norfolk Southern's performance and praised its leadership, strategy, improved safety metrics, and strong board. In contrast, CSX's operational and financial performance has reportedly slipped under Hinrichs' leadership.
CSX declined to comment on this matter. There are ongoing discussions about potential collaborations between rival railroads instead of mergers. Ancora is purchasing additional shares of Norfolk Southern (NYSE: NSC), indicating a continued interest in the railroad's performance.
Former CSX Chief Operating Officer Jamie Boychuk, who was Ancora's candidate to replace Norfolk Southern's operations chief, has been advising Ancora about CSX. Boychuk's insights could play a significant role in Ancora's strategy moving forward.
The railroad is also rebuilding its Blue Ridge Subdivision, damaged by Hurricane Helene in late 2024, and it's not expected to reopen until this fall. CSX recovered faster than expected from congestion related to harsh weather events and the closure of the Howard Street Tunnel in Baltimore for a clearance project.
As the situation unfolds, Ancora's actions regarding potential management change at CSX will depend on the actions CSX takes from here. The activist investor's intervention could lead to significant changes within the rail industry, particularly at CSX.
- Ancora Holdings, with concerns over CSX Corporation's operational and financial performance, is considering whether CSX should seek a merger partner or change management to improve performance, signaling potential investment in the automotive industry and transportation sector.
- The potential merger scenario between CSX and Union Pacific, suggested by industry analysis, could lead to structural improvements within the Class I railroad industry, increasing investing opportunities in the finance sector.
- Despite CSX's Q2 earnings beating Wall Street expectations and recovering faster than expected from various disruptions, the railroad's higher operating ratio and operational difficulties continue to be a focus of activist investors like Ancora Holdings.
