Activist hedge fund firm Elliott Investment Management has urged Honeywell International’s board to simplify its conglomerate structure, arguing the company could unlock significant value by separating its Aerospace and Automation divisions, according to a report by Alternatives Watch.
Elliott, which has invested over $5bn in Honeywell, wrote a letter to Honeywell as part of its move to modernise what it sees as an outdated business model. The company’s stock price hit a 2024 high of over $232 per share on the New York Stock Exchange after news of the letter broke.
Elliott’s call to action follows other high-profile campaigns, including recent efforts targeting Southwest Airlines’ management and board, and initiatives with Texas Instruments and Starbucks. Elliott, a $70bn hedge fund run by Paul Singer, believes Honeywell’s split would better position each division as an independent leader, driving long-term shareholder value.
In the letter, Elliott executives Marc Steinberg and Jesse Cohn highlighted Honeywell’s lagging performance, writing: “Once an operational powerhouse… Honeywell’s stock has languished over the past five years. Since 2019, Honeywell’s EPS growth has been at the low end of its peer set and, unsurprisingly, its shareholder returns have been equally disappointing.”
Elliott argues that a breakup could boost Honeywell’s share price by 51-75% over the next two years, and attributes the company’s stagnation to uneven execution, inconsistent financial results, and an outdated conglomerate structure. Simplifying the company into two standalone businesses would bring clarity, focused management, and improved capital allocation, according to Elliott.
According to Elliott’s analysis, Honeywell currently trades at a 25% discount compared to its aerospace peers, with the gap widening even against industrial firms without aerospace exposure.
Elliott has formally requested a meeting with Honeywell’s leadership to discuss a “shared commitment” to maximising the company’s value and aligning its structure with current market expectations.
