We're buying this stock ahead of lower rates — and would trim a winning name

Jim Cramer's Charitable Trust increased its Honeywell (HON) position, citing anticipated Fed interest rate cuts that should benefit industrial stocks and the potential for value creation from HON's upcoming spin-offs, including its aerospace division. Concurrently, the Trust indicated a desire to trim its Broadcom (AVGO) holdings if not restricted, aiming to right-size the position after a nearly 20% post-earnings surge caused its weighting to swell, despite the company's robust AI accelerator prospects.

Analysis

A bullish stance is being taken on Honeywell (HON) in anticipation of a favorable macroeconomic shift, specifically expected Federal Reserve interest rate cuts spurred by in-line CPI data and rising jobless claims. Jim Cramer's Charitable Trust is capitalizing on this outlook by increasing its HON position to 400 shares, representing a 2.25% portfolio weighting, through a purchase at roughly $212 per share. The entry point is viewed as attractive, given HON's shares have declined over 5% since late July, a lag attributed to investor indecision or "spin purgatory" ahead of its corporate breakup. The planned spin-offs, first of the Solstice Advanced Materials business in Q4 and later the more significant separation of its aerospace division in H2 2026, are identified as key catalysts expected to unlock shareholder value. Conversely, a disciplined portfolio management approach is signaled for Broadcom (AVGO). Despite a strong fundamental outlook for its AI accelerator business, the Trust would trim its position if not restricted, aiming to right-size a holding that has swelled to over 5% of the portfolio following a nearly 20% price surge since its last earnings report. This intended action represents prudent profit-taking rather than a bearish turn on the company's prospects.

Key Decisions for Investors

• Investors could view the recent underperformance in Honeywell (HON) as a strategic entry point, positioning ahead of the planned spin-offs of its Solstice and Aerospace divisions, which are identified as significant value-unlocking catalysts.
• For those holding Broadcom (AVGO), it may be prudent to review position sizing and consider trimming to realize gains after the stock's substantial run-up, thereby managing portfolio concentration risk even as the company's AI-driven fundamentals remain robust.
• Monitor upcoming macroeconomic indicators and Federal Reserve commentary, as the thesis for rotating into industrial stocks like Honeywell is heavily dependent on the materialization of interest rate cuts and a subsequent economic pickup.