fp0010494_nq.htm
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM N-Q
 
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF
REGISTERED MANAGEMENT INVESTMENT COMPANY

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)

THOMAS J. HERZFELD
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: 06/30/14
 
Date of reporting period: 03/31/14

 
 
 

ITEM 1. SCHEDULE OF INVESTMENTS

SCHEDULE OF INVESTMENTS AS OF March 31, 2014 (unaudited)

Shares or
Principal Amount
  
Description
  
Market
Value
  
   
Common stocks – 100.85% of net assets
      
           
   
Airlines – 7.99%
      
  17,827  
Copa Holdings, S.A
   $ 2,588,302  
  3,215  
ERA Group Inc.
     94,232  
               
     
Banking and finance – 9.35%
        
  21,280  
Bancolombia, S.A
     1,201,894  
  42,300  
Banco Latinoamericano de Exportaciones, S.A
     1,117,143  
  6,000  
Popular Inc.
     185,940  
  3,844  
W Holding Co. Inc.
     77  
  17,643  
Evertec Inc.
     435,782  
  12,000  
Western Union
     196,320  
               
     
Communications – 9.32%
        
  44,690  
America Movil, S.A.B. de C.V. ADR
     888,437  
  71,200  
America Movil, S.A.B. de C.V. Series A
     70,934  
  209,144  
America Movil, S.A.B. de C.V. Series L
     208,683  
  8,000  
Atlantic Tele-Network, Inc.
     527,360  
  513,210  
Fuego Enterprises Inc.
     170,848  
  212,994  
Grupo Radio Centro, S.A.B. de C.V. Series A
     269,329  
  28,400  
Grupo Televisa, S.A.B. ADR
     945,436  
  8,030  
Spanish Broadcasting System, Inc.
     47,056  
               
     
Conglomerates and holdings companies – 0.05%
        
  250,000  
Admiralty Holding Company
     --  
  70,348  
BCB Holdings Ltd.
     14,074  
  3,250  
Shellshock Ltd. Ord.
     2,926  
               
     
Construction and related – 9.60%
        
  54,561  
Cemex S.A.B. de C.V. ADR
     689,105  
  60,341  
Cemex S.A.B. de C.V. Series CPO
     76,532  
  20  
Ceramica Carabobo Class A ADR
     --  
  44,800  
Mastec, Inc.
     1,946,112  
  4,000  
Vulcan Materials
     265,800  
  1,900  
Martin Marietta Materials
     243,865  
               
     
Consumer products and related manufacturing – 4.25%
        
  327,290  
Grupo Casa Saba, S.A.B. de C.V. ADR
     97,820  
  13,300  
Watsco Incorporated
     1,328,803  
               
     
Food, beverages and tobacco – 14.58%
        
  95,244  
Chiquita Brands International Inc.
     1,185,788  
  53,874  
Cleanpath Resources Corp.
     48  
  19,602  
Coca Cola Femsa, S.A.B. de C.V. ADR
     2,068,403  
  18,900  
Fomento Economico Mexicano, S.A.B. de C.V. Series UBD
     176,359  
  9,500  
Fomento Economico Mexicano, S.A.B. de C.V. ADR
     885,780  
  20,890  
Fresh Del Monte Produce Inc.
     575,937  
 
 
 
 
 
SCHEDULE OF INVESTMENTS AS OF March 31, 2014 (unaudited) (continued)
 
 
Shares or
Principal Amount
  
Description
    
Market
Value
  
               
     
Housing – 4.81%
        
  40,500  
Lennar Corporation
   $ 1,604,610  
  6,100  
Homex Development Corp.
     8,601  
               
     
Investment companies – 0.85%
        
  7,000  
iShares S&P Latin America 40 Index
     255,990  
  800  
Latin American Discovery Fund, Inc.
     10,312  
  1,451  
Mexico Equity and Income Fund
     21,054  
  70,348  
Waterloo Investment Holdings Ltd
     --  
               
     
Leisure – 14.58%
        
  33,000  
Carnival Corp.
     1,249,380  
  34,343  
Norwegian Cruise Line Holdings
     1,108,249  
  30,000  
Royal Caribbean Cruises Ltd.
     1,636,800  
  19,467  
Steiner Leisure Ltd.
     900,349  
               
     
Mining – 4.20%
        
  3,872  
Grupo Mexico, S.A.B. de C.V. Series B
     12,225  
  27,000  
Freeport Mcmoran Copper
     892,890  
  23,900  
Tahoe Resources, Inc.
     505,485  
               
     
Pulp and paper - 0.15%
        
  18,300  
Kimberly-Clark de Mexico, S.A.B. de C.V. Series A
     48,875  
               
               
     
Railroad – 2.32%
        
  8000  
Norfolk Southern Corporation
     777,360  
               
     
Retail – 1.91%
        
  1,270  
Grupo Elektra, S.A.B. de C.V. Series CPO
     39,317  
  1,000  
Pricesmart, Inc.
     100,930  
  210,222  
Wal-Mart de Mexico, S.A.B. de C.V. Series V
     501,037  
               
     
Service - 0.03%
        
  700  
Grupo Aeroportuario del Sureste, S.A.B. de C.V. Series B
     8,603  
               
     
Trucking and marine freight – 9.85%
        
  12,280  
Grupo TMM, S.A.B. ADR
     10,561  
  1,017  
Seaboard Corporation
     2,666,015  
  2,000  
Seacor Holdings, Inc.
     172,840  
  8,361  
Teekay LNG Partners LP
     345,560  
  36,000  
Ultrapetrol Bahamas Ltd.
     111,600  
               
     
Utilities – 6.17%
        
  12,000  
Caribbean Utilities Ltd. Class A
     123,060  
  95,117  
Consolidated Water, Inc.
     1,253,642  
  700  
Cuban Electric Company
     --  
  40,500  
Teco Energy Inc.
     694,575  
               
     
Other – 0.84%
        
  25,000  
Geltech Solutions Inc.
     22,500  
  4,420  
Gusborne PLC
     5,674  
  13,000  
Impellam Group
     98,178  
  55,921  
Margo Caribe, Inc.
     156,579  
  895  
Siderurgica Venezolana Sivensa, S.A. ADR
     --  
  79  
Siderurgica Venezolana Sivensa, S.A. Series B
     --  
 
 
 
 
 
SCHEDULE OF INVESTMENTS AS OF March 31, 2014 (unaudited) (continued)
 
   Shares or
Principal Amount
  
Description
     Market
Value
  
               
     
Total common stocks – 100.85% (cost $28,788,236)
   $ 33,847,976  
               
     
Bonds – 0.00% of net assets
        
               
  165,000  
Republic of Cuba - 4.5%, 1977 in default (cost $63,038)
     --  
               
     
Other assets less liabilities – (0.85%) of net assets
   $ (286,329 )
               
     
Net assets - 100% (applicable to 3,713,071 shares; equivalent to $9.04 per share)
   $ 33,561,647  

 
 
 
 
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:
quoted prices in active markets for identical investments
Level 2:
other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)
Level 3:
significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

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, 2014:

   
Level 1
    
Level 2
    
Level 3
    
Total
  
Assets (at fair value)
                        
Common Stocks
   $ 33,576,305     $ 173,851     $ 97,820     $ 33,847,976  
Bonds
     0       0       0       0  
Total Investments in securities
   $ 33,576,305     $ 173,851     $ 97,820     $ 33,847,976  

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 December 31, 2013
   $ 0  
         
Unrealized gain/(loss)
     0  
Purchases
     0  
Sales
     (0 )
Transfers into Level 3
     97,820  
Transfers out of Level 3
     (0 )
         
Balance March 31, 2014
   $ 97,820  
 
 
 
 
 
ITEM 2. CONTROLS AND PROCEDURES

(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.

ITEM 3. EXHIBITS

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.
 
 
 
 

SIGNATURES

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/ Thomas J. Herzfeld
  
 
Thomas J. Herzfeld
  
 
Chairman and President
  
     
Date:
May 23, 2014
  

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/ Thomas J. Herzfeld
  
 
Thomas J. Herzfeld
  
 
Chairman and President
  
     
Date:
May 23, 2014
  
     
By
/s/ Reanna Lee
  
 
Reanna Lee
  
 
Treasurer
  
     
Date:
May 23, 2014