The Herzfeld Caribbean Basin Fund, Inc. (CUBA) investment activities in 1994 with the primary purpose of financially benefiting from the death of Communism in Cuba. Obviously it was premature.
The fund was launched and is still presently run by Thomas Herzfeld, who is 66 and still owns 5.49% of the outstanding shares. Herzfeld spent his entire career specializing in closed-end funds and still publishes much literature on the subject. For many years he was the pre-eminent expert on closed-end funds. CUBA is the only fund managed by Herzfeld.
CUBA is a non-leveraged equity fund with slightly more than $30 million in assets. Because of its size, it has a high expense ratio even though its turnover is approximately 25%. The expense ratio has been hovering between 2.66-3.28% over the past five years, which is unacceptable. Its five largest holdings are Seaboard (SEB), 10.59%; Coca-Cola Femsa (KOF), 6.94%; Copa (CPA), 6.75%; Watsco (WSO), 6.45%; and
Royal Caribbean (RCL), 5.55%.
CUBA can trade at large discounts as it has little trading liquidity. I strongly recommend purchases when the discount from net asset value exceeds 15%. I recommend purchasing at large discounts because it does hold good stocks, and more importantly, its time may come and Cuba may become free, which would be a great benefit to those companies that can do business in Cuba. It is not for everyone nor is it an immediately compelling investment. It offers an opportunity to prosper from the final death of Communism in Cuba.