by Cuba Journal staff
Please see our most recent article A Complete Guide To Investing In Cuba for the most current information about Cuba.
Amid the diplomatic ceremonies and press conferences surrounding the normalization of relations between the US and Cuba, the sharp instruments of capital appear to be quietly crafting the early stages of the island nation’s next decade. Tech companies operating in Cuba are having an immediate impact on the average citizen by solving specific problems such as room renting.
And while signs point to a nascent real estate boom, many are wondering how to participate in Cuba’s resurgence by investing directly in the sectors likely to have the brightest future.
One investment company that offers both direct, private equity investments and a publicly-traded closed end fund is Thomas J. Herzfeld Advisors, Inc., a Miami-based boutique investment management firm founded in 1984. Private equity investment are made through individual accounts and may be subject to restrictions, but the Herzfeld Caribbean Basin Fund (NASDAQ: CUBA) is available to any investor.
Started in 1994, the CUBA fund benefits from an investment team that has perhaps the longest track record of any professional investor with a focus on Cuba. The fund’s strategy is to invests in stocks and bonds likely to benefit from US-Cuba trade and growth in the wider Caribbean region.
Today, these stocks are mostly in US and Mexico. The fund is also a long time owner of Cuba’s sovereign bonds, which have enjoyed a resurgence in recent months. The fund was up 18.1% in 2014.
In an interview with Knowledge at Wharton and CNBC, Tom Herzfeld, the firm’s founder and chairman, said he expects initial investments in the private equity fund to run between $10 million and $20 million each. Herzfeld already has 300 individual accounts – and 50 to 200 of these investors are seeking direct investments in Cuba.
Sectors attracting the most money include tourism, construction, marine transport, telecom and hospitality among others. “Particularly building materials,” said Herzfeld.
“Back-and-forth commerce (that) aggregates between Florida and Cuba will be a major industry,” Herzfeld said. “Tourism certainly. There is a tremendous shortage of hotel rooms in Cuba, which will lead you to look at the cruise lines, because they actually have the most hotel rooms available that could be put into use immediately. And agriculture is something we could invest in now. Food’s exempt from the embargo.”
