US-Cuba policy shift could open market for many companies

NEW YORK, April 13 (Reuters) - The relaxation of some restrictions between the United States and Cuba on Monday is a step toward a policy shift that would benefit companies from cruise lines to freight operators, said the founder of a fund that bets on such companies.

For the past 15 years, Thomas Herzfeld's Herzfeld Caribbean Basin Fund (CUBA.O) has been investing in companies in the Caribbean that stood to see a gain in business if the 47-year-old trade embargo with Cuba was lifted.

Shares of the fund surged 41.1 percent to $7.97 after U.S. President Barack Obama lifted limits on family travel and money transfers by Cuban Americans in the United States to Cuba. For details, see [ID:nN13331508].

"I think everyone wants the embargo lifted, but it's not going to happen unless Cuba takes the positions the U.S. has requested," said Herzfeld, president and founder of Thomas J. Herzfeld Advisors, Inc, which runs the fund.

Herzfeld said he expects the travel restrictions on all Americans to be lifted shortly, which would particularly benefit cruise operators.

Indeed, Monday's news drove shares of Miami-based cruise operator Royal Caribbean (RCL.N) RCL.L up 11.4 percent to $11.23 in New York, while the stock of Carnival Corp (CCL.N) (CCL.L), the world's largest cruise ship operator, rose 2.3 percent to $26.20.

Herzfeld said Royal Caribbean and Carnival could see a double benefit if they were allowed to set sail for Cuba.

"Half of the revenues of Royal and Carnival come from the Caribbean. We believe the opening of Cuba could actually double their business in the Caribbean because not only will people travel to Cuba, but they'll combine it with a trip to the eastern Caribbean or western Caribbean," Herzfeld said.

The fund has its largest investment in Seaboard Corporation (SEB.A), which, along with a large pork business, runs a containerized shipping service between the United States, the Caribbean Basin and Central and South America.

HOLA, WESTERN UNION!

Western Union (WU.N), the world's largest payment transfer company, could also benefit from an easing of limits on money transfers as Cuban Americans send more money home to their families.

Herzfeld said the fund originally invested in companies that would do well regardless of whether the trade embargo was scrapped. But the gathering feeling of a policy change from Washington has prompted the fund to invest in companies that may not be making money now, but have a business plan for Cuba.

"With the election of President Obama, it seemed to many of us there was a much greater opportunity now than under any other U.S. president for the embargo to be lifted," Herzfeld said.

However, Herzfeld noted that Cuba is going to have to make efforts to implement long-demanded democratic reforms before the trade embargo is banished altogether.

"The first major announcement from Cuba I would like to see would be the release of political prisoners. That would really break the logjam." (Editing by Jan Paschal)