Another Reason To Own Honeywell: A Deeper Dive Into The Upcoming Spinoff

Sep. 12, 2018 9:12 PM ETHoneywell International Inc. (HON), GTX31 Comments
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  • Honeywell was already a must-own company/stock, but in my opinion, the spinoffs are another reason to own the company's shares today.
  • There is a lot to like about the upcoming spinoff, Garrett Motion Inc. However, investors need to consider several major risk factors.
  • I plan to hold onto my Garrett Motion shares once the company gets spun out. What are your thoughts on this soon-to-be standalone entity?
  • Members of my private investing community, Going Long With W.G., can follow this idea, as well as my other top picks with access to my model portfolio. Start your free trial today >>

I recently published a bullish article on Honeywell (NASDAQ:HON) and described why investors should stick with this "winning" company. As described in the linked article, Honeywell is well-positioned for 2018 (and beyond), and the company's recent operating results fully supports the bull case for this industrial conglomerate.

In this article, I will describe another reason why investors may want to stay invested in Honeywell through at least the end of 2018, i.e., the upcoming spinoffs, and more specifically, the Garrett Motion (NASDAQ:GTX) spin that will occur in the near future.

Garrett Motion - A Lot To Like Here

Honeywell announced that its board declared a pro rata dividend of stock in Garrett Motion Inc. that will be made on October 1, 2018, to Honeywell shareholders as of September 18, 2018 (the record date). According to the company, shareholders will receive 1 share of Garrett Motion for every 10 shares of Honeywell common stock that is owned. And finally, Garrett Motion will begin regular-way trading on the NYSE under the symbol "GTX" on October 1, 2018.

With the transaction details out of the way, let's focus on what shareholders will receive in early October. During the Garrett Investor Conference that was held on September 6, 2018, management did a great job describing the soon-to-be standalone company's business, financial position, cost structure and investment thesis.

Shareholders/prospective investors should definitely review the entire Investor Presentation, but I will provide my top three takeaways below. However, before we jump in, the following is Garrett Motion's business overview from the recently released Form 10:

Our Company designs, manufactures and sells highly engineered turbocharger and electric-boosting technologies for light and commercial vehicle original equipment manufacturers (“OEMs”) and the aftermarket. We are a global technology leader with significant expertise in delivering products across gasoline, diesel, natural gas and electrified (hybrid

This article was written by

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Our President and CIO is a CPA with experience in public accounting and the financial services industry. He earned his Master of Accountancy degree in 2008 and his B.S. in Business Management in 2007. He is also a Level III CFA candidate. He has been intrigued by the market from the start. Over the years, he has learned that long-term investing is a discipline that, if followed, will help contribute to building lasting wealth. As such, most of our articles will be about the investments that we plan to hold for at least 3 to 5 years, as long as the company's story does not change. As a Seeking Alpha contributor, our main goal is to write about the companies that are key to our portfolio with the hope of promoting discussion (for or against the investment) from others within the SA community.Please visit our website for more information about W.G. Investment Research LLC.

Disclosure: I am/we are long HON. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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