Herzfeld acknowledges that the Communist state that Castro built on the doorstep of the United States won’t necessarily disappear when Castro makes his final exit from power. And there are many risks to betting on a lifting of U.S. trade barriers with the island.
RAISING THE STAKES
He is convinced the days of the economic embargo are numbered, however, and took the first step earlier this year toward raising the stakes in his Cuba bet by filing a registration statement with U.S. regulators for a second Cuba fund that would allow for direct investment in Cuba itself.
Herzfeld declined to discuss the new investment company dubbed The Cuba Fund, Inc., saying U.S. Security and Exchange Commission rules prohibit him from doing so.
But the fund, which could be launched whenever the embargo seems likely to end, could potentially be much bigger than the Caribbean Basin Fund, with hundreds of millions of dollars in assets.
As he prepares to swoop down on Cuba, and profit from the demise of Castro’s regime, the soft-spoken Herzfeld might be described as the friendly face of “vulture capitalism.”
He said he preferred to think in terms of the “American Eagle,” however.
“Of course, the primary investment objective is to make money for the shareholders. But I want to be involved in rebuilding Cuba, a free Cuba,” he said.
The biggest holding in the Herzfeld Caribbean Basin Fund is Florida East Coast Industries which accounts for nearly 19 percent of its assets. The company runs a railroad between Jacksonville, Florida, and Miami called the Florida East Coast Railroad.
Herzfeld Caribbean Basin—in which Herzfeld says he is the biggest single shareholder with about 3 percent of outstanding shares—closed on Friday at $7.85.
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