According to the latest SEC filings, Herzfeld Caribbean Basin Fund (NASDAQ:CUBA) President Thomas Herzfeld sold 100,000 shares at an average price of $11.51 on 12/19 and another 100,000 shares at an average price of $13.08 on 12/22. Given that the NAV of the fund was only $8.20 on December 19 and $8.21 on December 22, it makes all the sense in the world for the fund's president to take some profits off the table.
After Tuesday's rally, Herzfeld Caribbean Basin Fund is still more than 60% above the net asset value of the fund. I stand by my belief that there is absolutely no fundamental reason for long-term holders to buy the fund at these prices.
For long-term investors who want to buy into the fund, it's my opinion that it is better to wait a week or two for the euphoria to die down. When the short-term traders are done front running each other and most have pressed the sell button, shares of the fund will trade much closer to NAV (or even at a discount to NAV), which so far hasn't rallied much after 12/18. Given that many of the companies in the fund are only tangentially related to Cuba and given that the fundamentals of other companies in the fund won't be positively affected until the U.S. Congress lifts the trade embargo, the NAV is unlikely to rally much further either.
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