A Backdoor Investment In Cuba: Herzfeld Caribbean Basin Fund Inc.

Herzfeld Caribbean Basin Fund Inc. (CUBA-NASDAQ), a closed-end investment management company perceived as an investor play and trading instrument that would benefit from the ropening up of Cuba, shares are up 17% out of the chute today at $14.71 on 33,900 shares. 
The fund’s investment objective is long-term capital appreciation by investing in issuers that are likely to benefit from economic, political, structural and technological developments in the countries in the Caribbean Basin, which consist of Cuba, Jamaica, Trinidad and Tobago, the Bahamas, the Dominican Republic, Barbados, Aruba, Haiti, the Netherlands Antilles, the Commonwealth of Puerto Rico, Mexico, Honduras, Guatemala, Belize, Costa Rica, Panama, Colombia and Venezuela. The fund is supposed to invest at least 80% of its total assets in a broad range of securities of issuers including U.S.-based companies that engage in substantial trade with, and derive substantial revenue from, operations in the Caribbean Basin Countries.

This one has been mentioned by us before as the trade to make if Cuba is going to re-open OR if Castro dies.
The reason for the gap up in "CUBA" is because of reports that Fidel Castro is in grave condition.  Havana has reportedly denied that its leader is in grave condition, so you’ll have to decide for yourself if Castro is talking to the Grim Reaper or if he is just laying low.

Back on December 29, there were SEC filings showing the chairman and president of Herzfeld Caribbean Basin Fund Inc. with a Form 4 filed with the SEC: Thomas J. Herzfeld reported he sold the shares for $15.58 to $16.08 apiece.

This CUBA fund has a 52-week trading range of $7.00 to $16.84.  We noted this back on August 1, 2006 as a backdoor play into Cuban investing, when Castro was sick.  Americans are by and large prohibited from investing in Cuba, and this is one of the few legal ways for Americans to play the situation.  The CUBA closed-end fund was trading around $7.00 back then and has risen dramatically on the investment community trying to position themselves ahead of any additional adverse health events for Castro.

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Jon C. Ogg
January 16, 2007