The investment firm founded by billionaire Christopher Hohn has increased its stake in Canadian National Railway Co., describing the railroad operator's stock as "undervalued" and an "attractive investment opportunity" in a filing to the U.S. Securities and Exchange Commission on Monday. 

London-based TCI Fund Management Ltd. said it increased its stake in CN Rail to 5.2 per cent, up from 4.25 per cent it last disclosed on June 30, placing it as CN's second-largest holder behind Bill Gates’ Cascade Investment LLC, according to Bloomberg data. 

The regulatory filing also includes commentary that is often associated with activist campaigns, including plans to engage in talks with company management on changes to its operations or its board makeup. 

"[TCI] may consider, explore and/or develop plans and/or make proposals (whether preliminary or final) with respect to, among other things, the company's operations, management, the composition of the board (including proposing or nominating director candidates to the board," the filing stated. 

TCI's investment comes a day before the U.S. Surface Transportation Board is expected to make its decision on a voting trust arrangement proposed by CN Rail in order to move forward with its US$30-billion acquisition of Kansas City Southern (KCS).

TCI's partners published an open letter to CN Rail management in May criticizing the deal for KCS, stating that the railroad should abandon its efforts for the Kansas City, Miss.-based company and that the board's move to seek STB approval for its voting trust proposal was "negligent and hugely irresponsible". TCI added in the letter that CN could be faced with an "$18 billion liability" if the deal is ultimately not approved and the trust needs to dispose of KCS.

"The STB is sending a clear signal and the CN board has a duty to listen. The risk that the voting trust is not approved is too great to ignore," according to the TCI letter sent in May to CN Rail Chair Robert Pace.  

TCI is also a major shareholder in CN Rail's main rival, Canadian Pacific Railway Ltd., with an 8.38 per cent stake in the firm as of June 30, according to Bloomberg data. 

A CN Rail spokesperson declined to comment on the TCI investment. A representative from TCI wasn't immediately available for comment.