Updates from 7:56 a.m. ET with Jim Cramer's comments.

Shares of railroad CSX (CSX) - Get CSX Corporation Report rose more than 16% early Thursday after news that Hunter Harrison, the railroad veteran who teamed with Bill Ackman to spearhead a revamp of Canadian Pacific Railway (CP) - Get Canadian Pacific Railway Limited Report , is reportedly teaming up with another activist to target CSX.

Harrison and Paul Hilal, who left Ackman's Pershing Square Capital Management last year to go out on his own, are aiming to shake up management at CSX and put the 72-year-old former Canadian Pacific CEO into a senior management position, according to The Wall Street Journal.

Hilal worked on the Canadian Pacific campaign while at Pershing Square.

CSX shares have stayed steady at $43 in trading both before and after the market opened Thursday. 

The report confirms speculation that surfaced Wednesday after Harrison announced an abrupt departure from Canadian Pacific months before his planned retirement. The company said that as part of the separation it had agreed to a limited waiver of Harrison's non-competition obligation in return for the exec agreeing to forfeit "substantially all benefits" he was entitled to.

Harrison came to Canadian Pacific in 2012 after Ackman won a proxy fight to overhaul the Calgary-based railroad's board. As CEO, Harrison trimmed costs and brought the railroad's operating ratio, a measure of efficiency, to a recent 56.2%. CSX, by comparison, has an operating ratio closer to 70%.

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The news comes less than 24 hours after CSX missed what many analysts had called a conservative fourth-quarter earnings estimate. The company has been hit hard by a decline in commodity prices and in particular a drop off in shipments of domestic coal.

CSX reported a "so-so" quarter, TheStreet's Jim Cramer, co-manager of the Action Alerts PLUS portfolio, said on CNBC's "Mad Dash" segment Thursday. He noted that the company lost an important coal contract, which weighed on results, but pointed out that Union Pacific (UNP) - Get Union Pacific Corporation Report , which beat on top- and bottom-line earnings estimates, saw better coal results.

However, most of CSX' business lines are set to improve this year and the 2017 year-over-year projections look good, Cramer said. While many analysts came away unimpressed with the last earnings report, others have made the case that the stock can go to $55 based on cash-flow valuations.

Could something happen between Harrison and CSX? Yes, it's possible, Cramer acknowledged.

Harrison, while at Canadian Pacific, attempted at various times to orchestrate a merger with CSX or its East Coast rival Norfolk Southern (NSC) - Get Norfolk Southern Corporation Report , pledging in both cases to extract costs similar to the impact he had at Canadian Pacific. It should be noted though that the East Coast railroads tend to have lower margins than their Canadian counterparts due to shorter stage lengths, meaning it could be hard for CSX to reach CP's numbers regardless of who is in charge.

It is unclear whether Harrison would target M&A if he takes a leadership role at CSX, but presumably, his presence inside the company would make it more open to overtures from Canadian Pacific. U.S. regulators and many large-rail customers have taken a firm stance against further consolidation among major railroads, but Harrison while at CP argued that the efficiencies that would be created from a combination between his Canadian company and CSX or Norfolk Southern would be able to gain approval.

CSX's current CEO, Michael J. Ward, has been in the role since 2003, and is no stranger to criticism. In 2008, activists Children's Investment Fund and 3G Capital Partners won four seats on the CSX board. CSX eventually won a suit against the investors, claiming they had violated securities law in that campaign.

Action Alerts PLUS, which Cramer co-manages as a charitable trust, has no positions in the stocks mentioned.