What Happened?

Shares of industrial conglomerate Honeywell (NASDAQ:HON) jumped 6.9% in the morning session after activist investor Elliott Investment Management built a stake worth more than $5 billion in the company. The stake made the investment firm the largest active investor when the position was revealed. Elliott advocated for a breakup of Honeywell into two separate companies, Honeywell Aerospace and Honeywell Automation, adding, "The conglomerate structure that once suited Honeywell no longer does, and the time has come to embrace simplification." This move is noteworthy given that activist investors often bring about significant changes in targeted companies, focusing on improving asset monetization, expense efficiency, and stock buybacks. After the initial pop the shares cooled down to $233.10, up 3.5% from previous close.

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What The Market Is Telling Us

Honeywell’s shares are not very volatile and have only had 2 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

Honeywell is up 11.6% since the beginning of the year, and at $233.10 per share, has set a new 52-week high. Investors who bought $1,000 worth of Honeywell’s shares 5 years ago would now be looking at an investment worth $1,281.

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