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Ackman’s Hedge Fund Sells Off Big Stake in Canadian Pacific

William A. Ackman, the billionaire investor, is once again shaking up his underperforming hedge fund's portfolio by selling off a big equity stake in the railway company Canadian Pacific.

Mr. Ackman's Pershing Square Capital Management on Wednesday sold its entire stake of 9.8 million shares in Canadian Pacific Railway in a series of trades arranged by three Wall Street banks, according to four people who asked not to be named. The shares were valued at about $1.5 billion based on Tuesday's closing price. Canadian Pacific shares closed on Wednesday at $147.28.

The move comes during another rough year for the well-known activist investor and his $11.9 billion firm.

As of the end of July, Pershing Square Holdings, a publicly traded fund, was down 19 percent for the year. Last year, it lost 20.5 percent.

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Mr. Ackman runs a highly concentrated portfolio that places big bets on a small number of companies, often accompanied by the manager's demands for corporate changes. As such, Pershing Square is particularly vulnerable to significant declines in the prices of just a few stocks.

The hedge fund has investments in about a dozen stocks, and it has been selling off big stakes in several of its better-performing positions throughout the year. The dollars raised from the stock sales could be used by the firm to pay redemptions to investors or to buy a big block of shares in another company later this year. In recent weeks, Pershing Square officials in meetings with investors have referred to the proceeds from stock sales as "dry powder" that could be used for a future stock purchase.

In a recent conference call, Mr. Ackman said investor requests to redeem money from the firm were running below average this year despite the firm's disappointing performance.

Earlier this year, Pershing reduced its stake in Mondelez International, selling 20 million shares in the food and beverage company. It also sold more than 16 million shares in Zoetis, the former animal health arm of Pfizer.

In April, the firm sold 4.1 million of the shares it had in Canadian Pacific, which at the time reduced its overall stake by 30 percent.

Pershing Square has suffered outsize losses on several stocks in its portfolio — most notably Valeant Pharmaceuticals. The troubled drug company's shares have fallen 78 percent this year as it has come under pressure over its pricing strategies and some of its sales distribution practices. Mr. Ackman is now a member of Valeant's board and has told investors he intends to take a hands-on approach to overseeing the company's turnaround.

The hedge fund's big bearish bet on Herbalife, the nutritional food supplement, worked against it once again this year. Shares of Herbalife are up 24 percent this year even after the company paid a $200 million to the Federal Trade Commission to settle an investigation into its business practices.

The settlement with the F.T.C., however, was something of a moral victory for Mr. Ackman, who has waged a high-octane campaign against Herbalife, claiming it is an unlawful pyramid scheme that takes advantage of its customers — many of whom are either poor or of modest means. The F.T.C. stopped short of calling Herbalife a pyramid scheme and ordering it to shut down. But the regulatory agency did charge the company with "deceiving hundreds of thousands of hopeful people" and directed it to make substantial changes to its sales practices and hire an outside monitor to oversee its activities.

Mr. Ackman has said his firm is maintaining its "short" bet, which will prove profitable if Herbalife's stock price collapses. Mr. Ackman has said Herbalife's revenue and profit will tumble if it changes its business practices as the F.T.C. has ordered.

Canadian Pacific has been one of Pershing Square's better-performing investments. The firm began buying shares and establishing a big stake in the company in 2011, when the stock was selling for just under $50. Shares of Canadian Pacific closed on Wednesday at $147.28.

In a May investor letter, Mr. Ackman said he continued "to have tremendous confidence in C.P.'s management and prospects" despite the earlier April sale of stock.