From CNBC · Jeff Marks · · 1m 20s
Honeywell bet didn't pay off, so we're selling half
Jim Cramer's Charitable Trust is cutting its Honeywell position in half after the aerospace breakup and Middle East headwinds.
In brief
Jim Cramer's Charitable Trust is cutting its Honeywell position in half after the aerospace breakup and Middle East headwinds. Sometimes you have to admit a thesis was wrong and exit before it gets worse, even if recent price action looks positive. Originally reported by CNBC.
Selling half of Honeywell position
Jim Cramer's Charitable Trust is selling 110 shares of Honeywell at roughly $209 each, cutting the position from 1.15% to 0.58% of the portfolio.
The breakup thesis failed
Honeywell Aerospace slashed its outlook last quarter due to severe supply chain challenges, derailing the value unlock the trust had anticipated from the company's breakup.
“the long-awaited Honeywell breakout did not go according to plan and became a special situation we got wrong”
Middle East conflict is a headwind
Honeywell lost revenue in the first and second quarters due to the Iran war, and the trust suspects these headwinds will linger through the rest of the year.
Wall Street estimates are too high
Management expects 15% earnings per share growth in 2027, but analysts are modeling around 20%. This gap suggests estimates will need to come down, which could pressure the stock.
Downgrading from buy to sell
The trust is downgrading Honeywell from a buy-equivalent rating to sell-on-further-strength, using recent strength to exit the position.
Still making money on the trade
Despite the failed thesis, the trust will realize a high single-digit percentage gain on shares purchased in 2023 and 2024.
Here's the gist
Sometimes you have to admit a thesis was wrong and exit before it gets worse, even if recent price action looks positive.
