As the tragic events from the Maui fires continue to unfold, the finger of blame has pointed squarely on Hawaiian Electric Industries (HE). The newly filed class action lawsuit alleges that Hawaiian Electric “chose not to deenergize their power lines during the High Wind Watch and Red Flag Warning conditions for Maui before the Lahaina Fire started”. This, coupled with several other lawsuits has pushed the share price of HE stock down over 63% in the last 4 trading sessions, its lowest price in 38 years.
Several viewers on my show have asked me if now is the time to buy shares given the huge discount and juicy dividend. To answer that question, it would be prudent to look for similar cases which have happened in the past. Having grown up in Northern California, the Tubbs Fire of 2017 comes to mind and is eerily similar. The Tubbs fire burned over 36,000 acres of land, destroying over 5,643 structures, and killing 22 people. Many pointed the finger at the Pacific Gas and Electric Company (PCG), accusing downed power lines of having started the fire. From early October of 2017 to February of 2018, PCG fell from $68 to $37. I’m sure many felt at that time that PCG was a great value buy. However, PCG filed Chapter 11 bankruptcy, often called a reorganization bankruptcy. This allowed them to restructure their business affairs, debts and assets, while still remaining in business.
