Investment Company Act file number 811-06445 




The Herzfeld Caribbean Basin Fund, Inc.


(Exact name of registrant as specified in charter)


119 Washington Avenue, Suite 504, Miami Beach FL 33139


(Address of principal executive offices) (Zip code)



119 Washington Avenue, Suite 504, Miami Beach FL 33139


(Name and address of agent for service)


Registrant's telephone number, including area code: 305-271-1900



Date of fiscal year end: 06/30/18



Date of reporting period: 03/31/18







SCHEDULE OF INVESTMENTS AS OF March 31, 2018 (unaudited)




  Shares or
Principal Amount
   Description  Market Value 
        Common stocks – 99.51% of net assets 
    Airlines – 9.91%    
 221,569   Avianca Holdings, SA Spon ADR   1,876,689 
 24,273.   Copa Holdings, S.A   3,122,236 
 13,474   ERA Group Inc.*   125,982 
     Banking and finance – 17.45%     
 19,780   Bancolombia, S.A.   831,156 
 63,166   Banco Latinoamericano de Exportaciones, S.A.   1,800,231 
 23,643   Evertec Inc.   386,563 
 378,775    First Bancorp (Puerto Rico)*   2,280,226 
 28,416   Home Bancshares Inc.   648,169 
 67,400   Popular Inc.   2,805,188 
 3,844   W Holding Co. Inc.*   -- 
 14,000   Western Union   269,220 
     Communications – 4.90%     
 44,690   America Movil, S.A.B. de C.V. ADR   853,132 
 71,200   America Movil, S.A.B. de C.V. Series A   68,260 
 209,144   America Movil, S.A.B. de C.V. Series L   197,646 
 11,988   ATN International   714,725 
 479,175   Fuego Enterprises Inc.*   100,675 
 210,994   Grupo Radio Centro, S.A.B. de C.V. Series A*   119,637 
 28,400   Grupo Televisa, S.A.B. ADR   453,264 
 32,272   Spanish Broadcasting System, Inc.*   19,040 
 14,017   Telesites S.A.B Series B-1*   10,889 
     Conglomerates and holdings companies – 0.00%     
 250,000   Admiralty Holding Company*   -- 
     Construction and related – 15.81%     
 270,645   Cemex S.A.B. de C.V. ADR*   1,791,670 
 70,590   Cemex S.A.B. de C.V. Series CPO*   46,445 
 20   Ceramica Carabobo Class A ADR*   -- 
 3,000   Martin Marietta Materials   621,900 
 109,297   Mastec, Inc.*   5,142,424 
 5,000   Vulcan Materials   570,850 
     Consumer products and related manufacturing – 3.71%     
 327,290   Grupo Casa Saba, S.A.B. de C.V. ADR*   -- 
 10,600   Watsco Incorporated   1,918,282 

     Food, beverages and tobacco – 9.01%     
 740,000   Becle, S.A.B. de C.V.*   1,495,932 
 18,900   Fomento Economico Mexicano, S.A.B. de C.V. Series UBD   172,304 
 14,610    Fomento Economico Mexicano, S.A.B. de C.V. ADR   1,335,792 
 36,500   Fresh Del Monte Produce Inc.   1,651,260 
     Housing – 5.64%     
 49,500   Lennar Corporation   2,917,530 
     Investment companies – 0.00%     
 70,000   Waterloo Investment Holdings Ltd.*   -- 
     Leisure – 16.65%     
 24,000   Carnival Corp.   1,573,920 
 8,745   Marriott Vacations Worldwide Corp.   1,164,834 
 48,944   Norwegian Cruise Line Holdings*   2,592,564 
 27,829   Royal Caribbean Cruises Ltd.   3,276,586 




     Mining – 0.77%     
 3,872   Grupo Mexico, S.A.B. de C.V. Series B   12,867 
 81,900   Tahoe Resources, Inc.   384,111 
     Pulp and paper - 0.07%     
 18,300   Kimberly-Clark de Mexico, S.A.B. de C.V. Series A   34,187 

     Railroad – 0.51%     
 1,928   Norfolk Southern Corporation   261,784 
     Retail – 1.26%     
 1,270   Grupo Elektra, S.A.B. de C.V. Series CPO   35,484 
 1,000   Pricesmart, Inc.   83,550 
 210,222   Wal-Mart de Mexico, S.A.B. de C.V. Series V   529,773 
     Service - 1.52%     
 4,600   Grupo Aeroportuario del Sureste, S.A.B. de C.V. ADR   784,622 
     Trucking and marine freight – 5.16%     
 585   Seaboard Corporation   2,495,025 
 9,589   Teekay LNG Partners LP   171,643 

     Utilities – 6.48%     
 12,000   Caribbean Utilities Ltd. Class A   156,000 
 129,538   Consolidated Water, Inc.   1,884,778 
 700   Cuban Electric Company*   -- 
 8,000   Nextera Energy, Inc.   1,306,640 
     Other – 0.66%     
 25,000   Geltech Solutions Inc.*   5,243 
 55,921   Margo Caribe, Inc.*   335,526 
 79   Siderurgica Venezolana Sivensa, S.A. Series B*   -- 
     Total common stocks – 99.51%(cost $40,853,350)   51,436,454 
     Bonds – 0.00% of net assets     
 165,000   Republic of Cuba - 4.5%, 1977 -     
     in default (cost $63,038)   -- 
     Total investments – 99.51% (cost $40,916,388)   51,436,454 
     Other assets less liabilities – 0.49% of net assets  $253,898 
     Net assets - 100% (applicable to 6,133,659 shares; equivalent to $8.43 per share)  $51,690,352 


*Non-income producing




Security Valuation


The Herzfeld Caribbean Basin Fund, Inc. (the “Fund”) records its investments in securities at fair value. Under generally accepted accounting principles (“GAAP”), fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date.


In determining fair value, the Fund uses various valuation approaches. GAAP establishes a fair value hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.


Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Fund. Unobservable inputs reflect the Fund’s assumptions about the inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The fair value hierarchy is categorized into three levels based on the inputs as follows:


Level 1:unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the ability to access.
Level 2:observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly. These inputs may include quoted prices for the identical instrument on an active market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates, and similar data.
Level 3:unobservable inputs for the asset or liability to the extent that relevant observable inputs are not available, representing the Fund’s own assumptions about the assumptions that a market participant would use in valuing the asset or liability, and that would be based on the best information available.


The availability of valuation techniques and observable inputs can vary from security to security and is affected by a wide variety of factors including the type of security, whether the security is new and not yet established in the marketplace, and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Those estimated values do not necessarily represent the amounts that may be ultimately realized due to the occurrence of future circumstances that cannot be reasonably determined. Because of the inherent uncertainty of valuation, those estimated values may be materially higher or lower than the values that would have been used had a ready market for the securities existed. Accordingly, the degree of judgment exercised by the Fund in determining fair value is greatest for securities categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls, is determined based on the lowest level input that is significant to the fair value measurement.


Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, the Fund’s own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date. The Fund uses prices and inputs that are current as of the measurement date, including periods of market dislocation. In periods of market dislocation, the observability of prices and inputs may be reduced for many securities. This condition could cause a security to be reclassified to a lower level within the fair value hierarchy.




Investments in securities traded on a national securities exchange (or reported on the NASDAQ National Market or Capital Market) are stated at the last reported sales price on the day of valuation (or at the NASDAQ official closing price); other securities traded in the over-the-counter market and listed securities for which no sale was reported on the date are stated at the last quoted bid price. Restricted securities and other securities for which quotations are not readily available are valued at fair value as determined by the Board of Directors.


The following table summarizes the classification of the Fund’s investments by the above fair value hierarchy levels as of March 31, 2018:


   Level 1   Level 2   Level 3   Total 
Assets (at fair value)                
Common Stocks                
USA  $27,882,045   $100,675   $0   $27,982,720 
Mexico   7,683,861    119,637    0    7,803,498 
Panama   6,799,156    0    0    6,799,156 
Puerto Rico   5,471,977    335,526    0    5,807,503 
Cayman   2,040,778    0    0    2,040,778 
Colombia   831,156    0    0    831,156 
Other   171,643    0    0    171,643 
Cuba   0    0    0    0 
Total Investments in securities  $50,880,616   $555,838   $0   $51,436,454 


The following is a reconciliation of assets in which significant unobservable inputs (Level 3) were used to determine fair value:


  Investments in
Securities at
Fair Value
Balance June 30, 2017  $0 
Unrealized gain/(loss)   0 
Purchases   0 
Sales   0 
Transfers into Level 3   0 
Transfers out of Level 3   0 
Balance March 31, 2018  $0 


Transfers from Level 2 to Level 1 were $156,000. Transfers from Level 1 to Level 2 were $555,838. Transfers between Levels related to the availability of trade information near the valuation date.


For more information with regards to significant accounting policies, see the most recent semi-annual or annual report filed with the Securities and Exchange Commission.




Unrealized Appreciation/(Depreciation)


As of March 31, 2018, the cost basis for federal income tax purposes, gross unrealized appreciation, gross unrealized depreciation and net unrealized appreciation/(depreciation) were as follows:


Tax Cost of
Tax Unrealized
Tax Unrealized

Net Tax Unrealized


$41,013,356 $13,436,725 ($3,013,627) $10,423,098




(a)The registrant's principal executive and principal financial Officers, or persons performing similar functions, have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of this Form N-Q that includes the disclosure required by this paragraph based on their evaluation of the controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b))and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934 (17 CFR 240.13a-15(b) or 240.15d-15(b)).


(b)There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the registrant's last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.




The certifications required by Rule 30a-2(a) under the Investment Company Act of 1940, as amended, and Section 302 of the Sarbanes-Oxley Act of 2002 are attached as an exhibit to this filing.






Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.  


The Herzfeld Caribbean Basin Fund, Inc.  
By /s/ Erik M. Herzfeld  
  Erik M. Herzfeld  
Date: May 25, 2018  


Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


By /s/ Erik M. Herzfeld  
  Erik M. Herzfeld  
  Chairman and President  
Date: May 25, 2018  
By /s/ Reanna Lee  
  Reanna Lee  
Date: May 25, 2018