Why Could Honeywell International (HON) Spin-Off Plans Drive Significant Upside

Attiya Zainib

Mon, May 18, 2026 at 11:23 AM EDT 3 min read

Merion Road Capital Management, an investment advisor, released its Q1 2026 Investor Letter. A copy of the letter can be downloaded here. Merion Road Capital Management reported that its Merion Road Small Cap Fund gained 3.1% in the first quarter of 2026, outperforming the Russell 2000, which rose 0.9%. Merion Road's long-only large-cap portfolio declined 3.7% amid broader market weakness reflected in the S&P 500. The performance in the small-cap fund was supported by strong contributions from holdings, driven by accelerating aerospace demand and margin expansion. The firm continues to position itself around long-term tailwinds in aerospace, defense, and advanced technologies, citing rising global military spending, ongoing geopolitical tensions, and increasing demand for mission-critical systems as key drivers shaping its constructive outlook despite near-term volatility. In addition, you can check the Fund’s top five holdings to determine its best picks for 2026.

In its first-quarter 2026 investor letter, Merion Road Capital Management highlighted stocks like Honeywell International Inc. (NASDAQ:HON). Honeywell International Inc. (NASDAQ:HON) is a diversified industrial technology company providing aerospace, automation, and energy solutions to commercial and government customers worldwide. The one-month return of Honeywell International Inc. (NASDAQ:HON) was -9.22% while its shares traded between $186.76 and $248.18 over the last 52 weeks. On May 15, 2026, Honeywell International Inc. (NASDAQ:HON) closed at $213.24 per share, with a market capitalization of about $134.44 billion.

Merion Road Capital Management stated the following regarding Honeywell International Inc. (NASDAQ:HON) in its Q1 2026 investor letter:

The Long Only portfolio fell 3.7% in Q1. During the period I bought a starter position in Honeywell (NASDAQ:HON). HON is a well-recognized diversified industrial conglomerate that is aggressively simplifying its portfolio. Last year they spun their specialty chemicals and materials operations, Solstice Advanced Materials, and have since filed the Form 10 for the spin-off of their aerospace division, which is expected to begin trading as Honeywell Aerospace (HONA) in a couple months. Management recently announced the sale of their low-margin Warehouse & Workflow Solutions business, further narrowing the company’s focus (Click Here to Read the Full Text).

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Honeywell International Inc. (NASDAQ:HON) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. As per our database, 79 hedge fund portfolios held Honeywell International Inc. (NASDAQ:HON) at the end of the fourth quarter, which was 76 in the previous quarter. While we acknowledge the risk and potential of Honeywell International Inc. (NASDAQ:HON) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.