Hedge fund giant Elliott targets Honeywell, with a massive stake exceeding $5 billion!
Hedge fund Elliott Management has become one of Honeywell's top five shareholders, investing over $5 billion, setting a record for its largest investment in a single stock. Elliott believes that Honeywell's business is too complex and plans to enhance the company's value through a spin-off. Honeywell's growth rate has failed to keep pace with the industry, its price-to-earnings ratio is low, and the historical premium for high valuations has weakened. Recently, Honeywell announced the spin-off of its advanced materials division to simplify its business structure
On November 12th, Tuesday, Eastern Time, according to Bloomberg, activist investment firm Elliott Management has quietly become one of the top five shareholders of industrial giant Honeywell, with an investment exceeding $5 billion, setting a record for Elliott's largest investment in a single stock.
Bloomberg cited sources familiar with the matter stating that Elliott believes Honeywell's business is overly complex and hopes to enhance the company's value through a split. This strategy is not without precedent; in recent years, several large industrial groups have optimized their businesses and increased their market value through splits.
Public information shows that Honeywell is one of the few large industrial groups in the United States that still maintains its integrity, with businesses covering aviation, energy, building, and industrial automation. Just a month ago, Honeywell announced plans to spin off its advanced materials division to simplify its business structure and improve operational efficiency.
However, Honeywell's growth rate has not kept pace with the overall industrial sector over the past five years. Compared to the 76% growth of the S&P 500 Industrial Index, Honeywell's stock price has only increased by about 25%. Although Honeywell's stock price has rebounded this year, rising by 7.4% and reaching a market capitalization of $146 billion, its historically high valuation premium has gradually diminished. In terms of price-to-earnings ratio, Honeywell's valuation is relatively low, with a P/E ratio of 0.4, ranking at the bottom among its industry peers.
In recent years, some large industrial groups have made notable splits. For example, General Electric spun off its healthcare business in 2023 and earlier this year split its energy business, dividing itself into three parts, each focusing on its area of expertise