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: 06/30/19


Date of reporting period: 09/30/18






SCHEDULE OF INVESTMENTS AS OF September 30, 2018 (unaudited)



Shares or        
Principal Amount   Description  Market Value 
     Common stocks – 97.85% of net assets     
     Airlines – 6.75%     
 221,569   Avianca Holdings, SA Spon ADR   1,245,218 
 24,273   Copa Holdings, S.A.   1,937,956 
 13,474   ERA Group Inc.*   166,404 
     Banking and finance – 17.65%     
 63,166   Banco Latinoamericano de Exportaciones, S.A.   1,321,433 
 19,780   Bancolombia, S.A.   825,222 
 21,356   Evertec Inc.   514,679 
 280,077   First Bancorp (Puerto Rico)*   2,548,701 
 28,416   Home Bancshares Inc.   622,310 
 57,100   Popular Inc.   2,926,375 
 3,844   W Holding Co. Inc.*   -- 
     Communications – 4.06%     
 44,690   America Movil, S.A.B. de C.V. ADR   717,721 
 209,144   America Movil, S.A.B. de C.V. Series L   168,329 
 5,116   ATN International   377,970 
 479,175   Fuego Enterprises Inc.*   71,876 
 208,234   Grupo Radio Centro, S.A.B. de C.V. Series A*   161,249 
 28,400   Grupo Televisa, S.A.B. ADR   503,816 
 32,272   Spanish Broadcasting System, Inc.*   4,518 
 14,017   Telesites S.A.B Series B-1*   10,959 
     Conglomerates and holdings companies – 0.00%     
 250,000   Admiralty Holding Company*   -- 
     Construction and related – 17.18%     
 310,645   Cemex S.A.B. de C.V. ADR*   2,186,941 
 20   Ceramica Carabobo Class A ADR*   -- 
 3,000   Martin Marietta Materials   545,850 
 117,297   Mastec, Inc.*   5,237,311 
 5,000   Vulcan Materials   556,000 
     Consumer products and related manufacturing – 2.87%     
 327,290   Grupo Casa Saba, S.A.B. de C.V. ADR*   -- 
 8,000   Watsco Incorporated   1,424,800 
     Food, beverages and tobacco – 8.60%     
 740,000   Becle, S.A.B. de C.V.*   1,195,524 
 14,610   Fomento Economico Mexicano, S.A.B. de C.V. ADR   1,445,952 
 18,900   Fomento Economico Mexicano, S.A.B. de C.V. Series UBD   187,128 
 42,500   Fresh Del Monte Produce Inc.   1,440,325 
     Housing – 1.56%     
 49,500   Lennar Corporation   2,311,155 
     Investment companies – 0.00%     
 70,000   Waterloo Investment Holdings Ltd.*   -- 
     Leisure – 20.07%     
 19,518   Carnival Corp.   1,244,663 
 14,745   Marriott Vacations Worldwide Corp.   1,647,754 
 56,944   Norwegian Cruise Line Holdings*   3,270,294 
 27,829   Royal Caribbean Cruises Ltd.   3,798,016 
     Mining – 0.76%     
 3,872   Grupo Mexico, S.A.B. de C.V. Series B   11,153 
 131,900   Tahoe Resources, Inc.   368,001 
     Retail – 1.40%     
 1,270   Grupo Elektra, S.A.B. de C.V. Series CPO   57,731 
 210,222   Wal-Mart de Mexico, S.A.B. de C.V. Series V   638,224 
     Service - 2.73%     
 6,600   Grupo Aeroportuario del Sureste, S.A.B. de C.V. ADR   1,353,858 




     Trucking and marine freight – 4.70%     
 585   Seaboard Corporation   2,170,373 
 9,589   Teekay LNG Partners LP   160,136 
     Utilities – 5.74%     
 12,000   Caribbean Utilities Ltd. Class A   157,200 
 121,638   Consolidated Water, Inc.   1,684,686 
 700   Cuban Electric Company*   -- 
 6,000   Nextera Energy, Inc.   1,005,600 
     Other – 0.68%     
 25,000   Geltech Solutions Inc.*   5,877 
 55,921   Margo Caribe, Inc.*   329,934  
 79   Siderurgica Venezolana Sivensa, S.A. Series B*   -- 
     Total common stocks – 97.85% (cost $41,049,905)   48,559,222 
     Bonds – 0.00% of net assets     
 165,000   Republic of Cuba - 4.5%, 1977 -     
     in default (cost $63,038)   -- 
     Total investments – 97.85% (cost $41,112,943)   48,559,222 
     Other assets less liabilities – 2.15% of net assets  $1,069,397 
     Net assets - 100% (applicable to 6,133,659 shares; equivalent to $8.09 per share)  $49,628,619 


*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  $26,608,848   $0   $0   $26,608,848 
Mexico   8,298,834    0    0    8,298,834 
Puerto Rico   5,989,755    329,934    0    6,319,689 
Panama   4,504,607    0    0    4,504,607 
Cayman   1,841,886    0    0    1,841,886 
Colombia   825,222    0    0    825,222 
Other   160,136    0    0    160,136 
Cuba   0    0    0    0 
Total Investments in securities  $48,229,288   $329,934   $0   $48,559,222 


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, 2018  $0 
Unrealized gain/(loss)   0 
Purchases   0 
Sales   0 
Transfers into Level 3   0 
Transfers out of Level 3   0 
Balance September 30, 2018  $0 


Transfers from Level 2 to Level 1 were $71,876. 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 September 30, 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 Securities
Tax Unrealized
Tax Unrealized

Net Tax Unrealized


$41,205,246 $11,744,846 ($4,390,870) $7,353,976






(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: November 27, 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: November 27, 2018  
By /s/ Erik M. Herzfeld  
  Erik M. Herzfeld  
Date: November 27, 2018