We're booking profits in a stock that has rallied almost 10% since our last buy

Jim Cramer's Charitable Trust is selling 30 shares of Honeywell at about $231.78, cutting the position to 390 shares and reducing portfolio weighting to 2.3% from roughly 2.5%. The trim follows a nearly 10% rally since late April and more than 6% gains since Thursday, as investors react to Honeywell's Quantinuum stake, a potential $1.05 billion IPO, and the prospect of a lower valuation around $12.7 billion. The trust will realize an average gain of about 33% on shares purchased in September 2022 and August 2023, and the rating is being downgraded to 2 ahead of June 3 and June 11 investor events.

Analysis

The market is beginning to treat HON less like a diversified industrial compounder and more like a hidden-call option on Quantinuum and the eventual breakup. That re-rating is fragile: if the quantum funding/IPO narrative cools, the multiple can compress quickly because the underlying industrial core likely cannot justify the recent price extension on standalone cyclical fundamentals alone. In other words, the stock has started to discount a strategic asset value that may not be monetized on the timeline the market is extrapolating.

The bigger second-order issue is portfolio construction around event sequencing. Two investor days ahead of the breakup create a classic “sell-the-news” setup: expectations will likely rise into the presentations, while management’s ability to bridge valuation gaps for aerospace and automation may be limited by macro industrial slowing and execution risk. If the market perceives the breakup as a financial engineering exercise rather than a catalyst for margin expansion, the current momentum can fade into a de-rating window over the next 2-6 weeks.

From a competitive dynamics standpoint, the public market is effectively marking up every beneficiary of the government-sponsored quantum theme, but HON’s exposure is more indirect and therefore lower quality than pure-plays. That makes HON vulnerable if investors decide the embedded optionality is already priced in while the industrial segment remains hostage to capex discipline and recession sensitivity. The contrarian take is that the trim may be early if Quantinuum IPO price discovery comes in materially above recent whispers, but the risk/reward is now skewed toward waiting for the June events rather than chasing strength.

Key Decisions for Investors

• Reduce HON exposure into the June 3 / June 11 event window; best risk/reward is to trim or hedge now rather than after investor days, because the stock is already pricing a favorable narrative with limited near-term upside surprise.
• Pair trade: long pure-play quantum exposure basket / short HON for 2-6 weeks if the goal is to isolate the quantum re-rating; HON has the lowest-quality linkage and is most vulnerable if the theme rotates away from diversified industrials.
• Sell covered calls on HON against existing long exposure into the breakup catalyst, targeting the next 30-45 days; this monetizes elevated event premium while protecting against a post-event mean reversion.
• If HON pulls back 5-7% before investor days without fundamental deterioration, consider re-entering or adding, as that would likely reflect de-rating rather than thesis failure and could offer a better entry ahead of breakup optionality.
• For event-driven accounts, use a tactical long/short industrials basket: long HON peers with clearer organic industrial catalysts, short HON as a lagging relative-value name if quantum enthusiasm fades.