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Activist investor Elliott Investment Management has taken a more than $5 billion stake in Honeywell International and is calling for the conglomerate to split into two separate companies.

In a letter sent to Honeywell’s board, Elliott said that the Charlotte, North Carolina-based company needs to simplify its structure as it deals with uneven execution, inconsistent financial results and an underperforming stock price.

Elliott is advising Honeywell to separate its automation and aerospace businesses.

“As independent entities, Honeywell Aerospace and Honeywell Automation would benefit from simplified strategies, focused management, improved capital allocation, better operational performance, enhanced oversight, and numerous other benefits now enjoyed by dozens of large businesses that have moved on from the conglomerate structure, including former conglomerates General Electric, United Technologies, and many more,” Elliott wrote.

The activist investor believes splitting up the aerospace and automation businesses would result in share-price gains of 51% to 75% over the next two years.

“Honeywell’s board of directors and management acknowledge and appreciate the perspectives of all our shareholders,” Stacey Jones, Chief Communicator at Honeywell, said in a statement. “Although Elliott had not made us aware of their views prior to today, we look forward to engaging with the firm to obtain their input. Our leadership welcomes investor feedback as we continue to execute a disciplined strategy, which includes pursuing sustainable growth, optimizing the portfolio, and maintaining an accretive capital deployment program.”

Shares of Honeywell rose 5% in early trading Tuesday.

Billionaire money managers are some of the savviest minds on Wall Street. However, the moves of hedge funds and family offices don’t always align with the opinions of analysts, whose job is to advise investors. But when the two do agree, it could mean an investment is about to soar higher.

That’s why it’s particularly notable that multiple billionaires are piling into the iShares Bitcoin Trust (NASDAQ: IBIT). The leading spot Bitcoin exchange-traded fund (ETF) has attracted the attention of several notable asset managers, including Israel Englander, David Shaw, and Steven Cohen in the first six months of 2024.

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• Israel Englander added 10.9 million shares of the ETF to Millenium Management’s portfolio.

• David Shaw’s D.E. Shaw & Company bought 2.6 million shares of the ETF.

• Steven Cohen bought 1.7 million shares for Point72 Asset Management.

At the same time, multiple analysts and Wall Street insiders have put a massive long-term price target on Bitcoin (CRYPTO: BTC), the underlying asset behind the iShares Bitcoin Trust. Ark Invest’s Cathie Wood says Bitcoin could reach $1 million or more by 2030. Bernstein analysts suggest it might take until 2033 to reach that milestone. Tech CEOs Michael Saylor and Jack Dorsey also expect Bitcoin to reach $1 million, and they’ve invested heavily in the cryptocurrency through their companies. That price represents an increase of 1,207% over the next six years, as of this writing.

Here’s the bullish case for Bitcoin and the iShares Bitcoin Trust.

The Securities and Exchange Commission (SEC) approved 11 spot Bitcoin ETFs at the start of 2024, and they could unlock a ton of value for Bitcoin. The ETFs make investing in Bitcoin much easier for institutional investors like the billionaires listed above.

So far, over $25 billion have flowed into those ETFs since their launch in January, as of this writing. But the majority of those funds came from retail investors, not the big banks and hedge funds. That said, investment advisors and hedge funds investing in Bitcoin ETFs like the iShares Bitcoin Trust are two of the fastest-growing parties of interest.

Many institutional investors may be waiting for more regulatory clarity on the cryptocurrency. Bitcoin prices surged on the news of Donald Trump winning the U.S. presidential election, as his administration is expected to provide a favorable regulatory environment for Bitcoin. Still, the real value will come from any regulation, regardless of whether it’s tight or loose, that gives institutional investors clear boundaries and guidelines for how to invest in Bitcoin.

Story Continues

Warren Buffett-backed Occidental Petroleum (OXY) reports third-quarter earnings late Tuesday, with analysts expecting a 37% drop in profits as investors focus on how the Permian Basin oil producer plans to reduce debt and clean up its balance sheet.

Ahead of Occidental’s Tuesday report, analysts predict Q3 EPS coming in at 74 cents per share, down 37% compared to $1.18 per share a year ago, with revenue totaling $7.12 billion, running basically flat vs. Q3 2023.

Occidental Petroleum is coming off a big expectations beat in Q2, when it saw a surprise 51% profit increase, breaking a string of five consecutive quarterly earnings declines.

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The Q3 financial report arrives as U.S. oil prices traded around $68 per barrel Tuesday, riding the ebb and flow of concerns over the conflict between Israel and Iran along with weak demand in China. U.S. oil prices since July have traded between $65 and $78.

OXY investors will be looking for details about the company’s plans to reduce the debt associated with its $12 billion acquisition of Permian Basin producer CrownRock. The deal adds 94,000 net Midland Basin acres and production of 170,000 barrels of oil equivalent per day to Occidental’s holdings.

Occidental Petroleum stock advanced 1% to 51.30 during market trade on Tuesday, adding to Monday’s 0.5% gain.

Eying A Clean Balance Sheet

Occidental has already said it is committed to reduce its debt by at least $4.5 billion within 12 months of Aug. 1, when it closed its acquisition of CrownRock.

Occidental Petroleum announced on Aug. 19 that it achieved $3 billion in principal debt reduction, using organic cash flow from “operations and proceeds from divestitures.”

“We believe our recent financial actions strengthen our balance sheet and accelerate our shareholder return pathway,” Chief Executive Vicki Hollub said in announcement.

Hollub added that OXY expects to achieve nearly 85% of its near-term $4.5 billion debt reduction commitment by the end of Q3.

The Lithium Price Cycle Has Bottomed. What To Expect Next For These Stocks.

On Aug. 1, Occidental Petroleum reported that Colombia-based Ecopetrol (EC) “decided not to acquire any interest in the CrownRock assets,” according to a regulatory filing. There had been speculation that Ecopetrol would take a 30% stake, or $3.6 billion, in CrownRock.

Ecopetrol has a joint venture in the Midland Basin with Occidental Petroleum. It has first right of refusal on participating in OXY projects or deals in the basin.

On July 29, OXY also signed a $818 million deal to sell its Barilla Draw property in the Delaware Basin to Permian Resources (PR).

Occidental Petroleum said on Aug. 19 it plans to apply the proceeds from the $818 million transaction toward debt repayments.

Warren Buffett’s OXY Stock Stake

Occidental Petroleum is pulled back from an April high, trading below both its 50-day moving average and its 200-day line and near its lowest level since early 2022. It has sunk around 29% since the April 12 high. Occidental is down about 15% in 2024.

Occidental’s third-quarter results follow Permian Basin producer Diamondback Energy (FANG), which reported mixed Q3 earnings and revenue on Nov. 5, with EPS down 38%. Exxon Mobil (XOM) and Chevron (CVX) also recently announced third-quarter earnings and revenue, with both U.S. supermajors seeing profits drop significantly compared to a year ago.

Buffett has a 6.5% stake in CVX.

Warren Buffett Stocks: What’s Inside Berkshire Hathaway’s Portfolio?

Buffett’s Berkshire Hathaway (BRKB) holds a 28.2% stake in Houston-based Occidental Petroleum, according to FactSet. Berkshire Hathaway also owns $10 billion of Occidental preferred stock and has warrants to buy another 83.9 million common shares for $5 billion.

In August 2022, the Federal Energy Regulatory Commission granted Berkshire Hathaway approval to purchase up to 50% of available OXY stock. However, Warren Buffett told shareholders in early 2023 he has no intention of taking over the company.

In December 2023, Warren Buffett also spent $588.7 million on more than 10 million shares of OXY stock, following Occidental’s $12 billion acquisition of Permian Basin producer CrownRock. The deal adds 94,000 net Midland Basin acres and production of 170,000 barrels of oil equivalent per day to Occidental’s holdings.

Meanwhile, the Organization of the Petroleum Exporting Countries, or OPEC, on Tuesday lowered its forecast for global oil demand growth in 2024 for the fourth straight month, estimating an increase of 1.82 million barrels per day, down from last month’s 1.93 million. The reason was primarily due to weaker-than-expected data from major consumers like China.

Occidental Petroleum stock has a 30 Composite Rating out of a best-possible 99. Shares also have a 13 Relative Strength Rating and an 85 EPS Rating.

Please follow Kit Norton on X @KitNorton for more coverage.

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