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Particular form of investing, which some of our members of the audience may not understand, and it's sometimes called activist investing. So maybe you can just help orient the audience about what exactly does Pershing Square Capital do? What's the general investment style? And why did you set it up that way?
So the vast majority of capital invested in the markets today is passive. So if you think of index funds or ETFs or even the big long only institutions, the vast majority of that capital is by charter passive. Passive means. You do your research in some cases, you don't do the research. You sort of just blindly follow an index and you're judged based on how closely follow the index.
If you think about investing 100 years ago, though, investing you had Andrew Carnegie owning 20% of U.S. Steel, where you had JPMorgan as a sort of large owner of various companies over time. And in the old days of investing, an owner would act like an owner. So if they were unhappy with the performance of the business, they would replace the CEO.
If they were unhappy with the board's judgment, they would make changes to the board. And as capitalism sort of democratize the investment process and as any kid in business school can open a brokerage account and as the the owners of many of these great businesses over time, you know, gave the shares away to a university or their heirs, and the ownership was spread out in the Sam Walton for the world kind of passed away.
And the boards became to be managed by professional owners. And so what we do is we look for situations where a business has lost its way, where an otherwise great company within a business that we would define as one that has significant barriers to entry that Warren Buffett would describe as having a moat around it, a business that is simple, predictable, generates cash, and we can be confident we'll be here 50 years from now.
A good example is we own a stake in Canadian Pacific, which is a railroad in Canada. And if you think about the railroad business, you know, it's not it's a business where they're not going to build a new one across the street. You know, you can have absent some fairly dramatic changes in technology, you can be pretty comfortable that, you know, goods will be shipped on rail for a very long time to come.
So it's a business we can predict. We can think about it from a very long term perspective. We can buy it at a price. That's interesting. In the case of CP. This was the worst run railroad in North America. It had the lowest profit margins. It was trading at the lowest valuation relative to earnings and had a very unhappy shareholder base.
But there was nothing they could do about it because they were inherently again, the biggest investors tend to be very passive. And we saw an opportunity. And the opportunity was if you could replace the worst CEO in the railroad industry with the best CEO in the railroad industry, a lot of money could be made.
And we bought first. 12% of the stock and then another 2%, about 14% of the stock. We recruited a guy named Hunter Harrison, who is widely considered the best railroad executive of all time. You know, certainly in North America, he had retired at 65. He was 66 and a half. He had signed a two year non-compete with his employer.
And I think the biggest mistake they made was a two year non-compete because he was running the, the other Canadian railroad, Canadian National and we hired him as a consultant. He helped us study the railroad, and he had plenty of fire in his belly. And he said, Look, would you be interested in the day job?
And he said, Let me check with my wife. She said, You know what? It's time to get you out of the house again. And my wife said, we recruited him, and then we had to simply put him in place. Now, the problem was you can name Pacific has one of the most sort of esteemed and illustrious boards in Canada, at least at the time.
And it was the former head of the Royal Bank of Canada, the former CEO of Suncor Energy, the former head of the steel business, you know, very, very important board. And they didn't like the idea that this idea was coming from outside the company. So they said no. So we went to the shareholders and we ran an election proxy contest.
We put up seven directors for seven seats on a 13 seat board and the shareholders voted with us 90% of the time and voted against the other guys and they got between three and 11% of the vote. We put our directors on, we did a review of the best CEOs in the world. Turns out the guy we identify was the best guy.
We put him in a CEO and it was six months ago and it's almost the most profitable railroad in North America. After six months. That's how quick this guy goes to work. So it's gone from 46 to $151 a share, you know, a little under $8 billion market cap to a $25 billion market cap. That's kind of the perfect example.
Now, it doesn't always work that way. And I have a feeling that Peter might ask me about one of those guys.
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