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It’s full steam ahead for Honeywell’s breakup plans as the industrial conglomerate is adding a new board member – an executive from activist hedge fund Elliott Management, which pushed hard for the split. It’s a smart move that has Jim Cramer feeling even more optimistic on the industrial stock. The news Honeywell announced Wednesday that longtime Elliott partner Marc Steinberg will join its board of directors, effective May 31. He will serve as an independent director and an audit committee member, which typically helps oversee a company’s financial reporting, risk management and other internal controls. “As one of its largest investors, we welcome the opportunity to partner with [CEO Vimal Kapur] and the Board as Honeywell executes a separation into three independent, industry-leading companies,” Steinberg said in a press release. “This portfolio transformation will position Honeywell to drive meaningful operational improvements and unlock a significant value-creation opportunity.” Steinberg has a wide range of experience helping other ailing public companies as a member of boards on online marketplaces Etsy and Pinterest . Elliott has a stake in both companies. Shares of Honeywell were modestly lower Wednesday and are roughly flat year to date. Big picture Investors tend to spend more of their time thinking about who is serving as a company’s CEO, CFO and other high-ranking executives such as key division heads. But boards of directors also play a key role in corporate governance and ensuring that shareholders’ interests are prioritized, so investors shouldn’t overlook who occupies those seats. Boards approve capital allocation decisions — like authorizing buyback programs, dividend increases and acquisitions — and provide a check on how executives are running the company on a day-to-day basis. At times of great disruption for a firm, such as when it’s breaking itself up, having a capable board in place becomes even more valuable. Steinberg’s appointment to Honeywell’s board comes around six months after Elliott disclosed a more than $5 billion position in the company — its largest ever stake in a single stock — and called for its aerospace and automation divisions to separated into standalone entities. Honeywell in February officially confirmed the breakup plans. Elliott’s pressure campaign was much-needed, though not that surprising; Jim had long been arguing that Honeywell needed to dramatically remake its portfolio. At the time, the company was coming off many quarters of lackluster organic revenue growth, which had weighed on its stock performance compared with peers. When Elliott announced its Honeywell position, the activist fund said that “a separation could result in share price upside of 51-75% over the next two years – a remarkable improvement for any business, let alone a $150 billion industrial bellwether.” During Honeywell first-quarter earnings call, CEO Kapur assured investors that the breakup plan was going smoothly. Honeywell plans for its aerospace and automation divisions to be separated in the second half of 2026. Meanwhile, its advanced materials spin-off, which was announced in October before Elliott’s stake was publicized, is on track to be completed in the fourth quarter of this year or early 2026. HON YTD mountain Honeywell International (HON) year-to-date performance Bottom line Steinberg joining Honeywell’s board is yet another positive development for shareholders. While Steinberg’s resume speaks for itself, this move sends an encouraging message that Elliott is committed to Honeywell. “They were the ones pushing for this breakup. … Now, you don’t want to see them run for the exits here. It shows that this is a long-term commitment,” Director of Portfolio Analysis Jeff Marks said on Wednesday’s Morning Meeting. And with Honeywell shares down slightly on the session, Jim said investors are getting “a great reason to buy” the stock. He added, “I am very sanguine with this position.” Honeywell’s been giving us exactly what we wanted since the split’s formal announcement in February. Jim has pounded the table in support, arguing that the three separate entities will be worth more on their own than within the conglomerate structure because each management team can be more focused on running their own businesses. The aerospace business, in particular, has immense potential as a pure-play investment opportunity. Plus, Jim expressed optimism on Honeywell’s near-term results, considering that executives have adopted conservative guidance this year. “I know Elliott thinks they’re beginning to get into a beat and raise pattern, which is important,” he said. (Jim Cramer’s Charitable Trust is long HON. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. 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An aircraft engine is being tested at Honeywell Aerospace in Phoenix.
Alwyn Scott | Reuters
It’s full steam ahead for Honeywell’s breakup plans as the industrial conglomerate is adding a new board member – an executive from activist hedge fund Elliott Management, which pushed hard for the split.
