Hawaiian Electric Industries, Inc. (HE): A Bull Case Theory

 We came across a bullish thesis on Hawaiian Electric Industries, Inc. on R. Dennis’s Substack by OppCost. In this article, we will summarize the bulls’ thesis on HE. Hawaiian Electric Industries, Inc.'s share was trading at $15.87 as of January 29th. HE’s trailing and forward P/E were 7.28 and 17.36, respectively according to Yahoo Finance.

Hawaiian Electric Industries, Inc., together with its subsidiaries, engages in the electric utility business in the United States. A massive institutional “whale” has established a high-conviction bullish position in Hawaiian Electric (HE) through a January 2027 risk-reversal involving 20,000 long $15 calls financed entirely by selling 20,000 $10 puts, creating a synthetic 2 million-share stake at zero net cost. This trade exploits a rare pricing distortion in HE’s volatility surface, where downside protection remains inflated due to lingering fears from the 2023–2024 wildfire crisis, while upside participation trades cheaply.

By monetizing this “distress skew,” the investor captures leveraged upside above $15 and accepts stock only at tangible book value levels, signaling confidence that HE’s downside is largely neutralized following the 2024 global settlement. With liabilities capped and Act 301 enabling securitization of wildfire-related costs, HE’s bankruptcy risk has materially diminished, and settlement opt-out numbers have proven far lower than feared. The balance sheet has stabilized through an equity raise, prefunded settlement payments, and renewed access to the bond market, while management has indicated future funding will avoid the dilutive equity issuance that previously crushed sentiment.

As HE’s rate base expands through mandated wildfire safety investments, book value is set to rise, making the $10 strike increasingly conservative. The whale’s bet targets a return to normalized earnings and a re-rating toward standard utility valuation multiples, with 2027 EPS expected to exceed $1.00 and a 15x P/E supporting a ~$16–$17 price target—placing the calls comfortably in the money. The signal is clear: institutional capital believes HE has bottomed, and the zero-cost risk-reversal offers a superior risk/reward profile versus owning the stock outright.

Previously we covered a bullish thesis on PG&E Corporation (PCG) by Acid Investments in February 2025, which highlighted the market’s exaggerated wildfire concerns despite PCG having no direct liability. The company's stock price has depreciated approximately by 4.53% since our coverage. This is because sentiment briefly shifted toward sector risk. The thesis still stands as fundamentals remain strong. OppCost shares a similar but emphasizes HE’s options-driven “distress skew.”

Hawaiian Electric Industries, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 28 hedge fund portfolios held HE at the end of the second quarter which was 29 in the previous quarter. While we acknowledge the potential of HE as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.